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Bank error or Book error? (bank reconciliation)
I'm having a hard time figuring out if the bank reconciliation made a bank or book error.
For example: The book statement recorded a debit memo of $500.00. While the bank recorded a debit memo of $400.00. Thank you. |
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Do you have something that tells you what the debit memo is for? Typically you would get something from the bank (aside from the bank statement) notifiying you that a deduction will be made and what it is regarding. I'm assuming this is a real-life situation versus homework. If so, call the bank. They should be able to explain the $400 charge. |
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May I ask something? I wanted to know what is really happening here. Let there be two companies, A and B. Company A debited $500, and the bank issued a memo saying $400 were debited from the account of Company B. Here, company B pays to company A. Would this be correct? It seems strange that there are bank charges, as the amount I expected Company A to receive less than $400 after any possible charges :confused: If not, never mind me ;) |
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A debit memo from a bank means they are making a deduction of some sort. It usually will be a charge from the bank itself, though it could involve another company. It could be bank fees, for example. It could be something like an automatic payment. The poster is indicating that there is a discrepancy where the bank is showing the fee to be $400 on his bank statement. The wording of the question is not exactly clear, but typically you will be comparing your bank statement to your books and reconciling them to be equal - which includes looking at outstanding checks and deposits, but also includes debit or credit memos shown by the bank. You make entries to your books for those memo entries. In this case, the entry made to the books seems to be for $500 while the bank is showing $400. It could be that the bank made an error or it could be that the entry to the books is wrong. If the poster knows why the deduction was made and has backup for the deduction, he can figure out whether the bank or books are correct. |
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Ah I see. So far, I've been reconciling bank statements with amounts input in the system of a company and wanted to know a little more about what I did. I found little differences though, one of some cents and another of about $1 (I was told that it was okay since it was insignificant as compared to the large sums dealt with). Thanks JLo :) |
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