Accured Interest

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This discussion clarifies the accounting entries required when a Fixed Deposit (FD) matures, especially when accrued interest has been booked in previous years. The correct procedure involves crediting the FD account and the current year's interest income, while debiting the bank account for the total maturity amount. If accrued interest was booked separately, specific entries ensure accurate reflection of both the accrued amount and the current year's earnings.

RESHMA

RESHMA (Querist)
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04 May 2020 what will be entry after maturity of FD with interest. If we had shown accured interest entry in previous years.

CA Altamush Zafar

CA Altamush Zafar (Expert)
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05 May 2020 Since Income has been booked at the time of accrual, the asset account which was created will be credited and bank a/c will be debited for interest amount on maturity.

KAVIRAJA ADDANGADI

KAVIRAJA ADDANGADI (Expert)
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05 May 2020 If you booked accrued interest with Fd you can debit bank credit matured FD with accrued interest and credit current year interest

If accrued interest separately booked
Than dr bank cr FD cr accrued Interest cr Interest for current year.