Hello,
My company recently set up a $20,000 overdraft with the bank, at the following terms: 16% Interest APR, 1% Management Fee and 1% Commitment Fee. Upon set up of the overdraft, the bank immediately took the entire 1% Management Fee and 1% Commitment Fee from our Account.
Please how do I journalize this transaction?
Dr. Bank Charges A/c
Cr. Bank Overdraft A/c
Narration : Being Rs. .....credited by bank against Management Fee @ 1% & Rs. .....against commitment fees @ 1%
Thank you for your reply.
Quick question though, this entry does not reflect the reduction of our bank balance by 1% management fee. Shouldn't we credit "bank" instead of "overdraft"?
Dr. Bank Charges
Cr. Bank Account
SSGS and Associates
Chennai
CA Inter
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