ReconciledrillBank service charge
A bank service charge is a fee the bank deducts directly from the account, so it appears on the statement but not in the books. Subtract it from the book balance in the reconciliation and record it with a debit to Bank Service Charges (expense) and a credit to Cash.
Syntax
Book side: subtract fee. Entry: Dr Bank Service Charges [fee] / Cr Cash [fee]| Part | What it is |
|---|---|
Side | Book side, subtract |
Account | Bank Service Charges or Bank Fees, an operating expense |
Examples | Monthly maintenance, wire fees, check printing, overdraft fees, NSF handling fees |
Examples
Book balance 2,340; statement shows service charge 25Result: Adjusted book balance 2,315. Entry: Dr Bank Service Charges 25 / Cr Cash 25.
Statement shows monthly fee 12 and wire fee 30Result: Subtract 42 on the book side; one entry Dr Bank Service Charges 42 / Cr Cash 42, or two separate entries.
Fee 25 was already recorded in the books on the day it was chargedResult: It is not a reconciling item; tick it on both sides.
Common mistakes
- Subtracting the fee from the bank balance: the statement balance already reflects it.
- Recording the fee as a reduction of interest income: fees are expenses, interest is income; keep them separate.
- Missing fees because they are small: scan every statement line without a check number.
Practice Bank service charge
These drills check your answer on live data, free, no account needed.
- The monthly service chargeClassify every line on the bank statement and in the cash book, then enter the adjusted bank and book balances.
- 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.
- Everything from the bankClassify every line on the bank statement and in the cash book, then enter the adjusted bank and book balances.
Questions
Is a bank service charge an expense?
Yes, an operating expense, usually under Bank Charges or Office Expenses on the income statement.
What is the journal entry for a bank service charge?
Debit Bank Service Charges, credit Cash, for the amount on the statement, dated the statement date or the reconciliation date.
Related
- Bank fee journal entryRecord bank fees from the statement with a debit to Bank Service Charges and a credit to Cash. Monthly fees, wire fees, NSF fees and merchant fees.
- Adjusted book balanceAdjusted book balance = ledger cash + interest + notes collected - service charges - NSF checks, plus or minus book errors. Examples and the matching entries.
- Interest earnedInterest the bank credits appears on the statement first. Add it to the book balance in the reconciliation and post Dr Cash / Cr Interest Income.
- NSF checkAn NSF (non-sufficient funds) check is a customer check the bank bounced after deposit. Subtract it from the book balance, reinstate the receivable, add fees.