calculation of fixed deposit
This query is : Resolved
08 September 2009
please explain me how to calculate fd interest on non-cumulative and cumulative fixed deposit. please explain accrued interest concept with journal entries and what will be the accounting treatment in current year and in the next year ? what will be the entry of accrued interest in the next year?
09 September 2009
Hi,
1) Calculation of int on non-cumulativa FD:
Its very simple,just calculate simple int for the period e.g. FD of 10,000/- @ 8% p.a. ,int to be recd monthly then int=(10,000*8%*1/12). This is for every month.
2) Calculation of int on Cumulative FD:
--U hv to calculate compound int..suppose in above example int is to be recd at the end of the period,cumulatively then for e.g.FD period is 1 year and int term is quarterly-cumulative then
int=(10,000*8%*3/12)for 1st qua i.e200/- now in 2nd qua int wil be calculated on (10,000+200) and so on....
3) Accumulated interest:
This is the interest which is due but not recd during the year. Suppose in above exa. u hv made FD on 15th mar,09 for 1yr,with non-cumulative int to be recd every month. Now ur 1st month int wil be recd on 15th april.but ur a/c wil end on 31st mar. It mean that 15days int(i.e. from 15thmar to 31st mar)is the income of the year ending on 31stmar 09 and remaining 15day int is income of yr 1-4-09 to 31-03-10. now u hv to make provision for accumulated int as follows:
first of all calculate int for the current yr,i.e. in our exa from 15-03-09 to 31-03-09. It is 10,000*8%*15/365=33/-
Journal Entry:
31-03-09
1) Accumulated int dr. 33
To FD interest 33
(Being prov for accumulated int on FD no...)
15-04-09
On this day u wil get int for 1mth i.e. 10,000*8%*1/12=66/-
1) Bank a/c dr.66
To Accumulated int 33
To FD int 33
(Being FD int recd.)
Hope u r cleared.
1) Calculation of int on non-cumulativa FD:
Its very simple,just calculate simple int for the period e.g. FD of 10,000/- @ 8% p.a. ,int to be recd monthly then int=(10,000*8%*1/12). This is for every month.
2) Calculation of int on Cumulative FD:
--U hv to calculate compound int..suppose in above example int is to be recd at the end of the period,cumulatively then for e.g.FD period is 1 year and int term is quarterly-cumulative then
int=(10,000*8%*3/12)for 1st qua i.e200/- now in 2nd qua int wil be calculated on (10,000+200) and so on....
3) Accumulated interest:
This is the interest which is due but not recd during the year. Suppose in above exa. u hv made FD on 15th mar,09 for 1yr,with non-cumulative int to be recd every month. Now ur 1st month int wil be recd on 15th april.but ur a/c wil end on 31st mar. It mean that 15days int(i.e. from 15thmar to 31st mar)is the income of the year ending on 31stmar 09 and remaining 15day int is income of yr 1-4-09 to 31-03-10. now u hv to make provision for accumulated int as follows:
first of all calculate int for the current yr,i.e. in our exa from 15-03-09 to 31-03-09. It is 10,000*8%*15/365=33/-
Journal Entry:
31-03-09
1) Accumulated int dr. 33
To FD interest 33
(Being prov for accumulated int on FD no...)
15-04-09
On this day u wil get int for 1mth i.e. 10,000*8%*1/12=66/-
1) Bank a/c dr.66
To Accumulated int 33
To FD int 33
(Being FD int recd.)
Hope u r cleared.
Message likes :
2 times
09 September 2009
if still not cleared,send me ur mail id,i'll send u file for int calculation..
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- About TDS & Income Tax
- Scrutiny and reopening of past returns
- Pass word to open justification report for Q1 for FY 2026-27
- PPF interest-As Exempt Income disclosure
- Section 194JA & JB Income which ITR Form to use
- Type of Capital Gain
- Booth for sales promotion
- F & O PROFIT REPORTING FOR AY 2026-27
- Grand in aid
- Accounting with Claude
- TDS on Rent received on redevelopment of building
- Tax on Deemed Capital Gain
- Indian IT Portal issue in computing tax as per UK-India DTAA
- Capital Gains on sale of residential flat
- Upload Level ValidationITR3Category of Defect B/D
- PF Taxable Income
- Clarification on Tax Audit Applicability and Reporting of F&O Transactions in ITR-3
- Interest credited in FY2025-2026 & TDS therein by EPFO does not reflect in AIS or Form 26AS
- 44ad eligble money lending interest
- Taxation in the hands of Landowner under JDA
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
