first one when interest is actually recd in cash, so to speak (actually it is bank) second one  (first part only) is to be passed at the time of finalisation of accounts, say at the end of the year or when quarterly accounts are prepared for submission to stock exch etc. next period when the int is recd the second part of second set of entries is passed. the first is mere receipt of int, second set is accrual and receipt in nxt period.

booking represents recording a transaction usually expense or income of revenue nature (or even capital for that matter) charging is transfer to the p&l account of revenue expense against income.

Hi anuj.........

1.Interest A/c     Dr.                        Rs.5000  

       To cash A/c                                                  Rs. 5000

(When interest was due and you have actually paid interest on deposit or loan taken)

2. (a)

Interest A/c    Dr.                                            Rs 5000                        

     To Interest Payable A/c                                         Rs. 5000

( this entry will be passed by you at the time of finalisation of accounts or at the time when interest is due but not paid)

2(b). nterest Payable   Dr.                                   Rs. 5000

     To Cash A/c                                                             Rs. 5000

( and this entry will be passed at the time of subsequent payment of interest which was made due earlier)

hope that above xplanation helps you

completely agree with kapil

thats right what Kapil Explained...........

1] AT THE TIME OF MAKING PAYMENT OF INTEREST

        INTEREST A\C                       Dr         5000

               TO CASH A\C                                          5000

2] AT THE TIME OF FINALISATION OF ACCOUNTS i.e. at the end of the year [FOR ACCRUED INTEREST]

      INTEREST A\C                         Dr         5000

             TO INTEREST PAYABLE A\C                     5000

3] A] REVERSE ENTRY OF [2] ABOVE TO BE PASSED IN THE IMMEDIATE NEXT YEAR

          INTEREST PAYABLE A\C         Dr       5000

                     TO INTEREST A\C                                  5000

     B] AT THE TIME OF ACTUAL PAYMENT OF INTEREST

          INTEREST A\C                           Dr       5000

                    TO CASH A\C                                        5000  

YOU HAVE MADE THE COMBINED ENTRY OF THE ABOVE [3] ENTRY. MAY BE THAT IS THE REASON WHY YOU GOT CONFUSED.

Completely agreed with Kapil  ( not Joel)

ya sure, me also completely agree with kapil...

Completely agree with kapil

Same as Kapil said

THANKS ALDRINE.....

Originally posted by : Reena Verma
	1] AT THE TIME OF MAKING PAYMENT OF INTEREST         INTEREST A\C                       Dr         5000                TO CASH A\C                                          5000 2] AT THE TIME OF FINALISATION OF ACCOUNTS i.e. at the end of the year [FOR ACCRUED INTEREST]       INTEREST A\C                         Dr         5000              TO INTEREST PAYABLE A\C                     5000 3] A] REVERSE ENTRY OF [2] ABOVE TO BE PASSED IN THE IMMEDIATE NEXT YEAR           INTEREST PAYABLE A\C         Dr       5000                      TO INTEREST A\C                                  5000      B] AT THE TIME OF ACTUAL PAYMENT OF INTEREST           INTEREST A\C                           Dr       5000                     TO CASH A\C                                        5000     YOU HAVE MADE THE COMBINED ENTRY OF THE ABOVE [3] ENTRY. MAY BE THAT IS THE REASON WHY YOU GOT CONFUSED.

Professional explanation… Reena verma…. Good

Regards

K.Ilayaraja

3] A] REVERSE ENTRY OF [2] ABOVE TO BE PASSED IN THE IMMEDIATE NEXT YEAR

          INTEREST PAYABLE A\C         Dr       5000

                    TO CASH/Bank A\C                                        5000  

Regards

K.Ilayaraja.

SAME AS KAPIL SAID