Question

On July 5th, Paul Potter's beginning checking balance is $20 and his account is credited for a deposit of $50. That same day, two checks are posted totaling $75.

Will an overdraft occur if Paul's bank credits deposits before it posts checks? yes or no

Will an overdraft occur if Paul's bank posts checks before it credits deposits? yes or no

Answer 1

Yes and yes.

Step-by-step explanation:

Answer 2

Either way, there will be an overdraft. the beginning balance is $20 add to it $50 and the total balance is $70. When the two checks totaling $75 are posted to the account, The account will be in the negative whether the checks post before or after the deposit. Before the deposit, the account will be overdrafted $55 if the checks post after the deposit, there will be an overdraft of $5. So, the answer to both questions is yes.