Bank-issued a demand draft for Rs. 15,000 in favor of Mayank. Bank charged RS. 50 for issuing the draft. The amount will be shown on the side and in a column of the cash book
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Bank charges is an expense for the business. It is credited in the cash book when paid as it reduces the balance as per cash book. Thus, bank charges of Rs. 5000 which have not been entered in the cash book will be credited in the cash book.
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A demand draft or a DD is a negotiable instrument issued by the bank. The meaning of negotiable instrument is that it guarantees a certain amount of payment mentioning the name of the payee. It cannot be transferred to another person in any situation.
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