Bank fees, interest, and returned checks
Objective: Record bank-originated transactions.
Recommended first: Cash receipts
Some transactions appear first on the bank statement: monthly fees, interest credited, and customer checks returned for non-sufficient funds (NSF). These must be recorded in the books.
- Fee: Dr Bank Fees Expense / Cr Cash.
- Interest: Dr Cash / Cr Interest Revenue.
- NSF check: Dr Accounts Receivable / Cr Cash — the customer still owes.
The bank statement often brings news: fees, interest, returned checks, and automatic collections. Each needs an entry in the books, dated when the bank recorded it. An NSF check reinstates the receivable because the customer still owes the money; any bank fee for the returned check is recorded separately as an expense.
Check your work
- Did you record every item the bank recorded that the books lacked?
- Was an NSF check reinstated as a receivable?
- Are fees recorded as expenses?
A $150 customer check bounces.
| Account | Debit | Credit |
|---|---|---|
| Accounts Receivable | $150.00 | |
| Cash | $150.00 |
Common mistakes
✗ Writing off an NSF check as bad debt immediately.
✓ Reinstate the receivable first and try to collect.
Guided practice
Use hints freely here.
Item 1 of 1
Monthly bank service fee
Corner Bean Café's bank statement shows a $36.00 monthly service fee deducted on Mar 30, 2026. It has not been recorded in the books.
Independent practice
Try these without hints. Completing the lesson needs at least one independent item solved without revealing the answer.
Item 1 of 4
Customer check bounced (NSF)
On Mar 27, 2026, the bank returns a $535.00 customer check marked NSF (non-sufficient funds). The original receipt was recorded as Dr Cash / Cr Accounts Receivable.
Checking answers on Pro items requires a Pro or Lifetime plan. See plans.
Progress is saved on this device. Create a free account to keep it everywhere.
Key terms
- NSF check
- A customer check returned for non-sufficient funds.
References and provenance
- OpenStax, Principles of Accounting, Volume 1: Financial Accounting (accessed 2026-10-29)
Original lesson written for Bookkeeping Exercises (AI-assisted drafting). Calculations are verified by the platform's automated accounting tests. Not yet reviewed by a credentialed accountant. Updated 2026-10-29.