Question

Ruby Co.’s accounting records show a cash balance of $4,200. The October bank statement reports a cash balance of $2,300. The statement also reports bank service fees of $100 and interest earned on the Ruby Co's bank account of $20. Ruby Co. determined there were $1,180 of check outstanding and $3,000 of deposits outstanding. Select the correct journal entry to record the bank service fees of $100 on Ruby Co.’s books.

Question 20 options:

	Debit Service Fee Expense $100 Credit Cash $100
	Debit Service Fee Expense $100 Credit Service Revenue $100
	Debit Cash $100 Credit Service Fee Expense $100
	Debit Accounts Receivable $100 Credit Service Revenue $100

Answer 1

Ans - Debit Service Fee expense $100
Credit cash $100

Bank service charges are those charges which account holder has to pay to the bank against all services provided by bank. This is an expense for the holder and just like any expense is to be paid in cash by passing the following journal entry

Particulars	Debit ($)	Credit ($)
Service fee expense	100
To Cash		100

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