Question

What will be the journal entry for bank charge interest 200?

Answer 1

Explanation:

bank charges a/c dr

to bank a/c

( being bank charged on deposits and its services)

Answer 2

Answer:

Explanation: The journal entry would be

Bank  Charges A/c Dr.......  Rs 200

To Bank A/c.......Rs 200

In order to understand the above journal entry we first need to understand the three basic golden rules of the double entry system as followed in accountancy. They are as follows:

• Debit that comes in, Credit that goes out .

• Debit all expenses, Credit all incomes.

• Debit is the receiver, Credit is the giver .

In the above example since the transaction does not involve any cash component and the banker would be deducting the charges directly from one`s account ,we need to reduce the bank balance by the said amount by crediting it and pass a debit entry under the head bank charges .

Hope this helps.