Asset on loan

you said loan amount received in bank a/c ...so asset must be purchased by paying from this bank a/c.   1st entry - Bank A/c Dr. 100000/- ...To Loan A.c 100000/-.... accordingly 2nd entry will be Asset a/c Dr. 100000/- ...To Bank A/c..

@ Hiten : The followwing entries required to be passed:

1) On disbursement of loan amount

      Bank A/c Dr.            1,00,000

          To Loan A/c                          1,00,000

      (Being amount received on account of loan sanctioned from ........... secured by,if any)

2) On purchase of Asset

      Asset A/c                                   Dr.     1,00,000

           To Bank A/c                                                   1,00,000

      (Being asset purchased on loan)

3) On interest due (each month)

     Interest A/c    Dr.

          To Loan A/c

     (Being interest due on loan)

4) On payment of EMI (each month)

      Loan A/c Dr.                      36,000

           To Bank A/c                                36,000

    (Being payment of EMI made)

5) On charging depreciation (at the end of each year)

    Depreciation A/c Dr.

        To Asset A/c

    (Being depreciation charged)

6) On transferring Interest & depreciation to P & L A/c (at the end of each year)

    P & L A/c Dr.

       To Interest A/c

       To Depreciation A/c

    (Being interest & depreciation transferred to P & L A/c)

I hope ur doubt is cleared now....