Question

A debit memo appeared on the May bank statement. How should this amount be treated on the May bank reconciliation?

a. Deduct it from the company's balance.

b. Add it to the company's balance.

c. Add it to the bank balance.

d. Deduct it from the bank balance.

Answer 1

Debit Memo:

Debit Memo means amount debited in bank statement as bank charges. So this amount is already debited in bank statement it means we have no add or deduct in bank balance.

Debit memo is not recorded in the company’s balance so we have to adjust this balance in company’s book. Debit memo means amount is debited in our bank statement so we have to deduct the same amount from company’s balance.

As per the above explanation,

Answer = Option A = Deduct it from the company's balance