How to Adjust Entries for Bank Credit Memos
Tracking finances can become complicated once a business grows to the point where there are multiple payments coming in and out. Each time a payment flows in, it must be recorded correctly in the bank ledger as a bank memo credit. It is inevitable that there will be a mistake in the ledger someday, and it will have to be corrected as quickly as possible.
- Review your
ledger periodically to check the ledger for errors. Locate the
inaccurate entry in the ledger and verify the correct amount of the
credit by reviewing your records. Check your receipts, your records,
invoices and bank statements. All of the records must match the
credit column in the bank ledger. - Debit the
business account by the amount equal to the entry that was entered
in error. Label the entry as a corrective debit, while attaching a
date to the transaction. Be sure to attach the date of the original
transaction as well. - Credit the
business account with the correct amount. Label the entry as a
corrective credit. Date the original entry and attach the original
transaction number to the credit. This will eliminate confusion for
people looking at the ledger later. - To avoid
mistakes, be sure to reconcile bank statements often and audit your
own accounts periodically. This will avoid having to adjust entries
for bank credit memos at all. If you have repeated problems with erroneous entries, you may want to discuss your business' accounting practices with a certified public accountant (CPA). They will be able to assist you with tips to avoid frequent mistakes to your business' ledgers.