Marcella Industries, a manufacturing company, recently completed its bank reconciliation process and discovered a credit memorandum from

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Question:

Marcella Industries, a manufacturing company, recently completed its bank reconciliation process and discovered a credit memorandum from the bank. This discovery prompts a careful evaluation of the company's financial records and necessitates an understanding of the impact on both the company's books and the bank statement.

In the context of the bank reconciliation, Marcella Industries is faced with a decision regarding how to address the credit memorandum. This decision involves considering the implications for the company's cash account on its books as well as the ending cash balance reported on the bank statement.

As Marcella Industries proceeds with the bank reconciliation, it must determine the appropriate course of action regarding the credit memorandum. Should the company increase or decrease its cash account on the company's books? Alternatively, does the credit memorandum signify an increase or decrease in the ending cash balance reported on the bank statement?

To accurately navigate this scenario, it's essential to comprehend the fundamental principles of bank reconciliation and the interplay between the company's financial records and the bank statement. By thoroughly analyzing the implications of the credit memorandum, Marcella Industries can ensure the accuracy and integrity of its financial reporting processes.

Considering these factors, which action should Marcella Industries take during the bank reconciliation process? Select the most appropriate option from the following:

Increase their cash account on the company's books.
Decrease their cash account on the company's books.
Increase the ending cash balance on the bank statement.
Decrease the ending cash balance on the bank statement.

In making this determination, consider the broader implications for financial reporting accuracy and the reconciliation of discrepancies between the company's records and the bank statement.