Bank charges and interest
What a bank charges a business, how a month of interest is worked out, and the double entry for each one.
Task 1What the bank charges for3 questions
A bank charges a business for running its account. It charges interest when the account is overdrawn, and it may pay interest on money held.
- Bank charges
- the bank's fees for running the account and handling items
- Interest paid
- interest the bank charges the business, for example on an overdraft
- Interest received
- interest the bank pays the business on money it holds
Calder Cycles pays £12 a month, plus £1.50 for each cheque it writes and each paying in at a branch. These fees are for this example only.
Bank charges and interest paid are expenses. Interest received is income.
Task 2A month of interest2 questions
Task 3Into the books4 questions