Bank Reconciliation

When preparing a bank reconciliation, credit memos are added to the balance per bank statement to get an adjusted cash balance.

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A bank decreased a depositor's account. To notify the depositor, the bank will issue a credit memo.

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A bank statement has a balance of P200. If the credit memos are P20 while the outstanding checks are P10, the adjusted cash balance is P190.

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The ledger balance of cash is P100. If the credit memos are P20, deposits in transit are P20, outstanding checks are P10, and NSF checks are P5, the adjusted cash balance is P110.

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Credit Memos are deposits made but not yet credited by the bank to the depositor's bank account.

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In a bank reconciliation, a note receivable collected by the bank is added to the cash balance per ledger.

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Certified Checks should be excluded from outstanding checks when preparing bank reconciliation because the bank, when certifying checks , automatically debits the depositor's account

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Cash Balance per books is P300, Cash Balance per bank statement is 430, credit memo is 190, debit memo is 30, deposits in transit are 50 and outstanding checks are 25 (including certified check of P5). The adjusted cash balance is 450.

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Bank statement is a report that is prepared for the purpose of bringing the balances of cash per records and per bank statement into agreement.

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All of the following represent debit memo:

a. Collections made by the bank on behalf of the depositor.

b.Interest income earned by the deposit.

c. Loan proceeds directly credited or added by the bank to the depositor’s account.

d. Interest expense on a loan that is directly deducted from the depositor’s account

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