You Are Trying to Explain Debit and Credit Memos That

question 15

Essay

You are trying to explain debit and credit memos that appear on bank statements and whether these will increase or decrease your company's bank account balance. Complete the following table to help your new staff understand. $$\begin{array} { | l | c | c| } \hline { \text { Item } } & \begin{array} { c } \text { Debit } \\\text { or } \\\text { Credit } \\\text { Memo }\end{array} & \begin{array} { c } \text { Increases or } \\\text { Decreases the } \\\text { Company's Bank } \\\text { Account Balance }\end{array} \\\hline \text { EFT payment } & & \\\hline \begin{array} { l } \text { Bank correction of an error due to posting another } \\\text { customer's check to your account }\end{array} & & \\\hline \text { Service charge } & & \\\hline \text { Note and interest collected for our company } & & \\\hline \text { NSF check } & & \\\hline \begin{array} { l } \text { Bank correction of an error recording a } \$ 250 \text { deposit as } \\\$ 520\end{array} & & \\\hline \text { EFT deposit } & & \\\hline\end{array}$$

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Definitions:

Overapplied

This term relates to a situation where the allocated costs in accounting exceed the actual indirect costs.

Underapplied

A situation where the allocated overhead cost is less than the actual overhead cost incurred.

Work in Process Account

An account used in accounting to track the costs associated with the production of goods that are not yet complete.

Ending Balance

The amount of money in an account at the end of a period, after all additions and subtractions have been accounted for.