Bank-side items Updated November 2026

Note collected by the bank

A note collected by the bank is a customer's note receivable, plus interest, that the bank received on the company's behalf and credited to the account. Add it to the book balance in the reconciliation and post Dr Cash, Cr Notes Receivable (principal) and Cr Interest Income (interest), less any collection fee.

Syntax

Book side: add. Entry: Dr Cash [net] / Dr Collection Fee [fee] / Cr Notes Receivable [principal] / Cr Interest Income [interest]

Part	What it is
`Side`	Book side, add
`Principal`	Credit Notes Receivable
`Interest`	Credit Interest Income
`Collection fee`	Debit an expense; the cash credited is the net amount

Examples

Book balance 7,000; bank collected a 2,000 note plus 60 interest

Result: Adjusted book balance 9,060. Entry: Dr Cash 2,060 / Cr Notes Receivable 2,000 / Cr Interest Income 60.

Same note, bank charged a 20 collection fee; statement credit 2,040

Result: Add 2,040 on the book side. Entry: Dr Cash 2,040 / Dr Collection Expense 20 / Cr Notes Receivable 2,000 / Cr Interest Income 60.

Customer paid an invoice of 900 by direct deposit (EFT) into the account

Result: Same treatment: add 900 on the book side; Dr Cash 900 / Cr Accounts Receivable 900.

Common mistakes

Crediting the whole amount to Interest Income: split principal and interest.
Adding the collection to the bank side: the statement already shows it.
Missing EFT receipts: customers who pay electronically show up only on the statement unless you have a remittance advice.

Practice Note collected by the bank

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

The bank collected a noteClassify every line on the bank statement and in the cash book, then enter the adjusted bank and book balances.
Recording a collectionClassify 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

Why does a note collected increase the book balance?

The bank received the cash and credited the account, but the company has not yet recorded it. The books are too low until the entry is posted.

What if the statement shows one net amount?

Use the loan or note documents to split it into principal, interest and fee for the entry; the reconciliation line can show the net.

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.
Adjusted book balanceAdjusted book balance = ledger cash + interest + notes collected - service charges - NSF checks, plus or minus book errors. Examples and the matching entries.
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.