Accounting entries

I have a quick query  ie We did not account for interest on loan during the year ( The accounting system is still open you can still process the journal entries relating to year end) . What is the correct journal entry to account for the interest in the accounting records?

Secondly , the capital portion of the loan was also not accounted for during the year. What is the correct entry to account for capital portion of the loan that was not accounted during the year?

Replies (1)
A. Accounting for Interest Expense : 1. Interest a/c dr to Interest Payable a/c (Interest due during the year) 2. Interest Payable a/c Dr To Bank (When interest paid) NOte: Interest Payable account should be reflected in the current liability in the BS) B . Loan recd not accounted for: 1. Bank a/c Dr To Loan a/c ( Loan capitalised) Note: Loan account should be shown in the longterm liabily in BS , assuming it is long term) Few Notes: 1. Interest payable should reflect whole interest due not paid, accrued not yet due. You can make 2 different accounts for these 2 calculation, as its easier to keep track) 2. Ensure Loan capitalisation is with the full amt unless you have started paying the principal amt. Interest payable account/s should be disclosed separately in BS

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