Question

Accompanying the bank statement was a debit memo for bank service charges. What journal entry is required in the company's records? a. debit Cash; credit Accounts Payable b. debit Cash; credit Other Income c. debit Accounts Payable; credit Cash d. debit Miscellaneous Expense; credit Cash

Answer 1

Answer:

d. debit Miscellaneous Expense; credit Cash

Explanation:

Bank service charges are usually very small, and as a result, they are often included in the miscellaneous expenses ledger account. As an expense, it is debited when it increases.

This charge would reduce cash, and as a result, cash would be credited.

The Journal Entry would be:

Account                                 Debit              Credit

Cash                                                              $xxxx

Miscellaneous Expense       $xxxx