**Understanding Debit and Credit Memos in Bank Statements**In financial accounting, debit and credit memos are documentation provided by a bank to describe entries that have been made to a company's bank account. These memos can often be found as enclosures within a bank statement. It's essential for businesses to understand the types of transactions that these memos represent in order to accurately maintain their financial records. **Types of Credit Memos:**Here are some examples of transactions that might be described in a credit memo:a. **Deposited Check Returned for Insufficient Funds** - Description: This typically refers to a check that a company had deposited into its bank account, but which was subsequently returned due to the payer having insufficient funds to cover the check.b. **Service Charge** - Description: Banks may periodically apply service charges to a company's accounts for account maintenance or other services provided. This would be documented in a credit memo.c. **Customer Check Adjustment** - Description: This involves a situation where a customer’s check might have an error. For instance, if a customer's check for $375 was mistakenly recorded by the company as $735 on the deposit ticket, a correction would need to be made.d. **Collection of a Note Receivable for the Company** - Description: This refers to the collection of a receivable by the bank on behalf of the company, often a long-term note receivable that has been collected in cash, subsequently crediting the company’s bank account.By understanding these types of credit memos, a company can better manage and reconcile their bank statements, ensuring that their financial records are accurate and up to date.

A Credit memo is given to customer by the seller who sells they goods and services to customer . IT…

A debit or credit memo describing entries in the company's bank account may be enclosed with the bank statement. An example of a credit memo is Oa. a deposited check returned for insufficient funds Ob. a service charge Oc. notification that a customer's check for $375 was recorded by the company as $735 on the deposit ticket Od. collection of a note receivable for the company

A debit or credit memo describing entries in the company's bank account may be enclosed with the bank statement. An example of a credit memo is Oa. a deposited check returned for insufficient funds Ob. a service charge Oc. notification that a customer's check for $375 was recorded by the company as $735 on the deposit ticket Od. collection of a note receivable for the company

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Identify whether each of the following items would be (a) added to the book balance, or (b) deducted from the book balance in a bank reconciliation. 1. EFT transfer to a supplier. 2. Bank service charge. 3. Check printing charge. 4. Error recording check #214 which was written for $450 but recorded for $540. 5. Collection of note and interest by bank on company's behalf.
Sal's Surf Shop deposits all receipts in the bank and makes all payments by check. On July 31 the cash account had a balance of $6,105.42. The bank statement on July 31 reported a balance of $4,146.46. Upon comparing the bank statement to the books, the following items were found.
The following data were gathered to use in reconciling the bank account of Reddan Company: $ 17,900 10,300 Balance per bank Balance per company records Bank service charges 40 Deposit in transit Note collected by bank with $170 interest Outstanding checks a. What is the adjusted balance on the bank reconciliation? 3,400 4,900 6,140 b. Journalize any necessary entries for Photo Op. Company based on the bank reconciliation. If an amount box does not require an entry, leave it blank.
1)The credit department runs a credit check on all customers who apply for credit one in account proves uncollectible, the credit department authorizes the right off of the accounts receivable number 2) cash receipts come into the credit department which separates the cash received from the customers remittance slips. The credit department list all cash receipts by customer name and amount of cash received 3) The cash goes to the treasurer for deposit in the bank the remittance slip go to the accounting department for posting to customers. 4) The controller compares the daily deposit slip to the total amount posted to the customers account. Both amounts must agree.
In the normal operation of business you receive a check from a customer and deposit it into your checking account. With your bank statement you are advised that this check for $775 is NSF. The bank also informs you that due to the amount of activity on your business account the monthly service charge is $75. During a bank reconciliation, you will: a. add both values from balance according to books. b. subtract both values from balance according to books. c. add both values from balance according to bank. d. subtract both values from balance according to bank.
Analyze the following errors that appeared on Black Electric’s bank statement and in the accounting records: a. The bank recorded a deposit of $30 as $300. b. The company’s bookkeeper mistakenly recorded a deposit of $250 as $520. c. The company’s bookkeeper mistakenly recorded a payment of $450 received from a customer as $540 on the bank deposit slip. The bank caught the error and made the deposit for the correct amount. d. The bank statement shows a check that was written by the company for $392 was erroneously paid (cleared the account) as $329. e. The bookkeeper wrote a check for $275 but erroneously wrote down $257 as the cash disbursement in the company’s records. Requirement For each error, describe how the correction would be shown on the company’s bank reconciliation.
Accompanying a bank statement for Borden Company is a credit memo for $15,225 representing the principal ($15,000) and interest ($225) on a note that had been collected by the bank. The company had been notified by the bank at the time of the collection but had made no entries. Journalize the entry that should be made by the company to bring the accounting records up to date. If an amount box does not require an entry, leave it blank. UD
identify each of the following reconciling items as: an addition to the cash balance according to the bank statement a deduction from the cash balance according to the bank statement an addition to the cash balance according to the company's records a deduction from the cash balance according to the company's records (None of the transactions reported by bank debit and credit memos have been recorded by the company.) Item Treatment 1. Bank service charges, $50. 2. Check of a customer returned by bank to company because of insufficient funds, $520. 3. Check for $345 incorrectly recorded by the company as $435. 4. Check for $200 incorrectly charged by bank as $2,000.
6, 7, A bank reconciliation for October 31 follows. Bank statement balance Add: Deposit in transit Deduct: Outstanding checks Adjusted bank balance View transaction list < 1 2 Note: Enter debits before credits. Date October 31 Bank Reconciliation October 31 Journal entry worksheet Cash $ 6,482 3 291 6,773 79 $ 6,694 Prepare the necessary journal entries based on the bank reconciliation. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Book balance Add: 4 Collection of a note Interest earned Deduct: NSF check Bank service charges Adjusted book balance Record the $400 collection of a note receivable by the bank on our behalf. Saved General Journal $ 400 64 Debit 63 61 $ 6,354 Credit 464 6,818 124 $6,694
Identify whether each of the following items would on appear on the bank side or the book side of a bank reconciliation. Enter Bank or Book below. Bank service charges Outstanding checks Deposits in transit NSF check Interest on a checking account The company properly wrote a check for $95.80 that the bank incorrectly paid as $9.58. The bank printed checks for the depositor for a fee. Bank debit memorandum Bank credit memorandum The bank collected a $1,000 note for the depositor.
A written order for a bank or other financialinstitution to pay a stated dollar amountto a specified business or person is called aa. check.b. deposit slip.c. notes receivable.d. receipt.e. debit memorandum