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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Items on company’s bank statement

The following items may appear on a bank statement:

  1. 1. Bank correction of an error from posting another customer’s check (disbursement) to the company’s account
  2. 2. EFT deposit
  3. 3. Loan proceeds
  4. 4. NSF check

Using the following format, indicate whether each item would appear as a debit or credit memo on the bank statement and whether the item would increase or decrease the balance of the company’s account:

Item No. Appears on the Bank Statement as a Debit or Credit Memo Increases or Decreases the Balance of the Company’s Bank Account

To determine

Bank Reconciliation Statement: Bank statement is prepared by bank. The company maintains its own records from its perspective. This is why the cash balance per bank and cash balance per books seldom agree. Bank reconciliation is the statement prepared by company to remove the differences and disagreement between cash balance per bank and cash balance per books.

To determine:  Whether items appear as debit/credit memo on the bank statement and whether items increase/decrease the balance of the company’s account.

Explanation

In the bank records, company’s account has a credit balance. The following are items that shows increase in the company’s account.

  • Bank correction of an error from posting another customer’s check
  • EFT Deposit
  • Loan proceeds

Thus, the above items indicate a credit in the company’s account...

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