Journal entries Updated November 2026

Bank fee journal entry

Debit Bank Service Charges (an expense) and credit Cash for the fee shown on the statement. Date it in the month the bank charged it so the reconciled cash balance is correct. Merchant processing fees deducted from card deposits are recorded the same way, as an expense against the gross receipt.

Syntax

Dr Bank Service Charges [fee] / Cr Cash [fee]

Part	What it is
`Bank Service Charges`	Expense account; sometimes Bank Fees or Bank Charges
`Cash`	Credit for the amount deducted
`Merchant fees`	Dr Merchant Fees, Dr Cash (net), Cr Sales or A/R (gross)

Examples

Monthly maintenance fee 15

Result: Dr Bank Service Charges 15 / Cr Cash 15

Outgoing wire fee 30 and incoming wire fee 10 on the same statement

Result: Dr Bank Service Charges 40 / Cr Cash 40

Card sales 1,000 deposited net of 29 processing fee (971 received)

Result: Dr Cash 971 / Dr Merchant Fees 29 / Cr Sales 1,000

Common mistakes

Recording the card deposit as 971 of sales: sales are 1,000; the 29 is an expense.
Posting fees to Interest Expense: fees are not interest; keep a Bank Charges line.
Missing fees that appear as part of another line, such as a reduced loan payment: read the statement detail.

Practice Bank fee journal entry

These drills check your answer on live data, free, no account needed.

Recording fees and interestClassify every line, enter both adjusted balances, then choose the journal entry the company must record for each item that affects its books.
The monthly service chargeClassify every line on the bank statement and in the cash book, then enter the adjusted bank and book balances.

Questions

Are bank fees tax deductible?

For a business, bank fees are an ordinary operating expense and are generally deductible. Personal account fees are not.

Where do bank fees appear on the income statement?

Under operating expenses, often as Bank Charges, or within General and Administrative expenses.

Bank service chargeA bank service charge appears on the statement before the books know about it. Subtract it from the book balance and post Dr Bank Fees / Cr Cash.
Bank reconciliation journal entriesThe journal entries that follow a bank reconciliation, one per book-side item: service charges, interest, NSF checks, notes collected, book errors.
Interest income journal entryRecord bank interest with a debit to Cash and a credit to Interest Income when the statement shows it. Includes the accrual version for interest not yet paid.