TeachMeFinance.com - explain Memorandum check
Memorandum check -- When a bank sends through the clearing
house a check payable by another bank and it is rejected
by that bank because there are no funds on deposit with
which to meet it or for some other reason the second bank
returns it by messenger to the first bank. The first bank having
been credited with it and the second bank having been
debited with it at the clearing house the first bank must pay
the amount of it to the second bank. It accordingly delivers
the amount of it in money to the second bank's messenger if
the check is small ; if the amount is large it issues to the
second bank a memorandum check which the second bank
sends through the clearing house the next day for collection.
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