Accounting entries

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