Question

Where do you record a montly service charge and cheque printing charges on the Reconcilliation?

Answer 1

In Bank Reconciliation Statement, "put it where it isn't” a general rule. Means one amount was reflected Passbook is not reflected in Cash Book or vies a versa.

Definition of Bank Reconciliation Statement

“A statement which reconciles the Bank balance as per Cash Book and the balance as per Pass Book showing all causes of difference between the two.”

Sometimes bank charges their customers for various services provided to them. It may be in the form of bank charges or Monthly Service Charges or Cheque Printing Charges etc. Bank debits the customer’s account for such facilities time to time. However, company's management will know about these charges, commission etc. only when it goes through the bank Pass Book / bank statement. So, on the date of reconciliation balance as per Pass Book will be less than that of Cash Book.

Monthly Service Charges and Cheque Printing Charges appears in passbook but not in Cash Book due to time difference

Bank service charges are fees deducted from the bank statement for the bank's processing of the checking account activity like accepting deposits, posting checks, mailing the bank statement, etc. Other types of bank service charges include the fee charged when a company overdraws its checking account and the bank fee for processing a stop payment order on a company's check. The bank might deduct these charges or fees on the bank statement without notifying the company. When that occurs the company usually learns of the amounts only after receiving its bank statement.

Because the bank service charges have already been deducted on the bank statement, there is no adjustment to the balance per bank. However, the service charges will have to be entered as an adjustment to the company's books. The company's Cash account will need to be decreased by the amount of the service charges.

Cheque printing charge is on the bank statement, but it isn't on the company's books. Put it where it isn't as an adjustment to the Cash account on the company's books.

Because the Cheque printing charges have already been deducted on the bank statement, there is no adjustment to the balance per bank. However, the check printing charges need to be an adjustment on the company's books. They will be a deduction to the company's Cash account.

Conclusion:

1. Bank service charges deducted from the company's Cash account.

2. Cheque printing charges deducted from the company's Cash account.