Book reconciling items

• Credit memos – These are book reconciling items not representing deposits credited by the bank to the account of the depositor but not yet recorded by the depositor as cash receipts. The following are examples of credit memos (Averkamp, 2018):
• • Interest earned – This is a type of credit memo that will appear on the bank statement when a bank gives a company interest on its account balances. The amount is added to the checking account

  balance and is automatically on the bank statement. Hence, there is no need to adjust the balance per the bank statement. However, the amount of interest earned will increase the balance in

  the company's Cash account on its books.
• Notes receivable collected by bank – This is a type of reconciliation where the bank will increase the company's checking account for the amount it collected (principal and interest) and will decrease the account by the collection fee it charges. This represents proceeds of a note collected by the bank for the depositor. Since the bank has added the note to the depositor’s account, the depositor must also add this in the cash balance per books.
• Debit memos - These are book reconciling items not representing checks paid by the bank which are charged or debited by the bank to the account of the depositor but not yet recorded by the depositor as

  cash disbursements. The following are examples of debit memos (Averkamp, 2018):
• Bank service charges – This type of debit memo comprises fees deducted from the bank statement for the bank's processing of the checking account activity (accepting deposits, posting checks, mailing the bank statement, etc.) Other types of bank service charges include the fee charged when a company overdraws its checking account and the bank fee for processing a stop payment order on a company's check. The depositor must deduct the amount from the cash balance per books.
• Book reconciling items:

  1. Credit memos
  2. 1.1 Interest earned AND 1.2 Notes receivable collected by bank
  3. Debit memos
  4. 2.1 Bank service charges and NSF check and Check printing charges