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Banking Journal Entries

The document discusses journal entries for various banking transactions including deposits, withdrawals, cheque receipts and payments, dishonored cheques, interest charges and payments, and bank service charges. It provides examples and solutions for journal entries for each type of transaction.

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rajindere saini
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955 views8 pages

Banking Journal Entries

The document discusses journal entries for various banking transactions including deposits, withdrawals, cheque receipts and payments, dishonored cheques, interest charges and payments, and bank service charges. It provides examples and solutions for journal entries for each type of transaction.

Uploaded by

rajindere saini
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Journal Entries | Banking Transactions

(Part-1)
Recording of Banking Transactions:

All businesses make many transactions with the bank in their day-to-day activities. Journal
Entries related to banking transactions are as follows:

1. When cash is deposited in the bank:

Journal Entry:

Example: Cash is deposited in the bank ₹10,000.

Solution:

2. When cash is withdrawn from the bank:

Journal Entry:

Example: Cash is withdrawn from the bank ₹2,000.

Solution:
3. When cash is withdrawn from the bank for personal use:

Journal Entry:

Example: Proprietor withdrew cash from the bank for his personal use ₹5,000.

Solution:

4. When the cheques, drafts, etc., received from the customers are not sent to the bank
for collection on the same date and deposited at the bank on any other day or endorsed
to any other party.

A. When any cheque is received and not sent to the bank for collection:

Journal Entry:

Example: 01 April 2022- A cheque of ₹11,000 was received from Bijay.

Solution:
B. When the above cheque was sent to the bank for collection:

Journal Entry:

Example: 05 April 2022- Cheque received from Bijay was sent to Bank.

Solution:

Or

C. If the above cheque was endorsed in favour of any other party:

Journal Entry:

Example: 05 April 2022- Cheque received from Bijay was endorsed to Nupur.

Solution:
5. When the cheques, drafts, etc., received from the customers are sent to the bank for
collection on the same date:

Journal Entry:

Example: A cheque of ₹5,000 was received from Sayeba and deposited in the bank on the
same day.

Solution:

6. When a customer directly deposits any amount in the firm’s bank account:

Journal Entry:

Example: Gaurav, a debtor, deposited ₹20,000 directly into the firm’s bank account.

Solution:
7. When a cheque previously deposited into the bank gets dishonoured:

Journal Entry:

Example: Cheque received from Sayeba ₹5,000, which was earlier deposited into the bank
gets dishonoured.

Solution:

1. Payment is received through cheque, and a discount is allowed.

A. When a cheque is received from a customer, and a discount is allowed to him


(Cheque is deposited into the bank on the same day):

Journal Entry:

Example: Received a cheque of ₹19,400 from Vishal and deposited it in the bank, and
offered him a discount of ₹600.

Solution:
B. If the above cheque gets dishonoured:

Journal Entry:

Example: Vishal’s cheque which was sent to the bank for collection, and got dishonoured.

Solution:

2. When a payment is made through cheque:

Journal Entry:

Example: Paid to Akanksha through cheque ₹8,000.

Solution:
3. When expenses are paid through cheque:

Journal Entry:

Example: Rent paid through cheque ₹800.

Solution:

4. When interest is charged by the bank:

Journal Entry:

Example: Interest charged by bank ₹500.

Solution:
5. When interest is allowed by the bank:

Journal Entry:

Example: Interest allowed by bank ₹1,000.

Solution:

6. When a bank charges any amount for the services rendered:

Journal Entry:

Example: Bank charges ₹50.

Solution:

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