What Entry has to be passed in case of Loan, Principal and interest in the books. Pls. explain thru. illustration
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Entries in case of loan taken
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Suppose installment amount is 20000 and from which pricipal is 5000 and interest is 15000 then entry will be loan account (principal amt) dr.5000 interest account dr.15000
To bank account 20000.......okk
EMI paid Rs.10,000/- (principle Rs.8000 & int Rs.2000)
Loan a/c Dr. 8,000.00
Interest on Loan a/c Dr. 2,000.00
To Bank a/c 10,000.00
1. When Loan was taken from Bank/Financial Instution amounting to Rs.20 L.
XYZ Bank A/c Dr. Rs.20L
To, ABC Bank- Loan A/c Rs.20L
(Being Loan amt recd)
2. When Interest on loan is accrued at the month end (From EMI Statement we can know that how much is for Interest & how much is for principal, Suppose Total EMI = Rs. 30,000 out of which Principal: Rs.20,000 & Interest Rs.10,000) :-
Interst on Loan A/c Dr. Rs.10,000
To, Interst on Loan (Payable) A/c Rs.10,000
(Being JV paased for accrual of Interest on Loan)
3. At the time of making payment:-
ABC Bank - Loan A/c Dr. Rs.20,000
Interest on Loan (Payable) A/c Dr. Rs.10,000
To, XYZ Bank A/c Rs.30,000
(Being Loan EMI Paid)
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