Journal Entry and Ledger Posting for Service Charges deducted by the Bank

Generally Banks charge some amount for providing service to their customers on different heads like,

  • Cash Deposit Charges

  • Cheque Clearing Charges

  • ATM/Debit Card Charges

  • Minimum Balance non maintenance Charges etc.

Now let's discuss with example what will be the Journal Entry and Ledger Posting when Service charges are deducted by the Bank.

The following Ledger Accounts will be affected.

Bank Charges Account shows Debit effect.

Bank Account shows Credit effect.

Journal Entry

Journal Entry for Bank Charges deducted by the Bank

Ledger Posting 

In Bank Charges Account.

Bank Charges deducted by the Bank - Posting in Bank Charges Ledger Account.

In Bank Account

Bank Charges deducted by the Bank - Posting in Bank Ledger Account.

Example :

In the Books of M/s.Trimurthy Traders, Axis Bank charged ₹125/- to Axis Bank Current Account for Cheque clearing charges on date 02/08/2021

Pass necessary Journal Entry and Post them into their respective Ledger Accounts for the above transaction.

In the above example

Debit Ledger is :

  • Bank Charges Account

Credit Ledger is :

  • Axis Bank Current Account

Journal Entry

Journal Entry for Bank Charges deducted by the Bank - Example

Ledger Posting 

In Bank Charges Account.

Bank Charges deducted by the Bank - Posting in Bank Charges Account - Example

In Axis Bank Current Account

Bank Charges deducted by the Bank - Posting in Bank Account - Example

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Location: Cuttack, Odisha, India

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