Bank service charges are fees that banks charge for various services such as account maintenance, transactions, and other banking activities. These charges are typically recorded as an expense in the company's financial records.
Scenario:
A company incurs a bank service charge of ₹2,000.
Journal Entry for Bank Service Charge:
| Date | Particulars | Debit (₹) | Credit (₹) |
|---|---|---|---|
| 2024-06-01 | Bank Service Charges A/c | 2,000 | |
| To Cash/Bank A/c | 2,000 | ||
| (Being bank service charges recorded) |
Explanation:
- Bank Service Charges A/c is debited to record the expense.
- Cash/Bank A/c is credited to reflect the cash outflow for the bank service charges.
Example with Different Details
Scenario: A company incurs a bank service charge of ₹1,500.
| Date | Particulars | Debit (₹) | Credit (₹) |
|---|---|---|---|
| 2024-06-01 | Bank Service Charges A/c | 1,500 | |
| To Cash/Bank A/c | 1,500 | ||
| (Being bank service charges recorded) |
Explanation:
- Bank Service Charges A/c is debited to record the expense.
- Cash/Bank A/c is credited to reflect the cash outflow.
Summary:
Recording bank service charges ensures that the expenses are accurately reflected in the company's financial statements. This helps in understanding the true cost of banking services and managing the company's cash flow effectively.
