Exchange is a charge made to cover the costs of collecting an item, including in that the interest delay in realizing cash on an out-of-town item for which immediate credit has been given. Assume a customer deposits over the receiving teller's window a $4,000 item drawn on a bank in some town in the exchange charge group; assume further that the charge is 1/20 of 1%, or $2. The entry on the general ledger to record the receipt of such a deposit would likely be:

Some of the regular customers of a bank prefer to be charged once a month for exchange charges. The difference between this and the procedure explained is that at the end of the month the customer will be charged for his exchange, or if he prefers he will remit for it. At the time of deposit under such an arrangement, the depositor would receive credit for the face of all items.