How accurately and precisely show fds in a balance sheet ?

Accounting Entries 568 views 3 replies

golfer

trading & investment

53 Points Posted on 27 May 2019

One has many fixed accounts, they are all different- some get self renewed, some gets deposited in saving account, interest goes to SB a/c while principal is renewed etc.

They are of different maturities also-there may be a 10 year deposit with accrued interest being credited in the last year.

my question is : is there a proper and foolproof methodology to show fixed deposits with accrued interest in a balance sheet, so that BS also tallies without any adjusting entries or adjustments.

Form 26 AS only shows how much interest bank has given in an year along with the tax deducted, this interest may be accrued or realized in SB account.

If we calculate the interest in an excel sheet,a significant difference appear with what banks as banks regularly cut TDSs, and both compounding create a significant difference.

how to correctly enter FDs in BS and make it tally ?

can any expert come up with a step by step fool-proof methodology ?

Replies (3)

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

211715 Points Posted on 28 May 2019

"can any expert come up with a step by step fool-proof methodology?"

No foolproof methodology available, specifically when accounting methods of bank & assessee differ, also due to interest rate changed due to premature withdrawal etc.
Practical solution is calculate interest as per your own process, and verify it with bank module. If major change or mistake on part of Bank, report it immediately for rectification. Minor difference are not objectionable, but deduct TDS as per bank issued form 16A. Segregate sav account interest for sec. 80TTA deduction.

golfer

trading & investment

53 Points Posted on 28 May 2019

I got your point.

But what should be the approach ?

shall the following approach will be right ?

approach 1:

(1) write sum of principals of all FDs in the asset side.

(2) refer 26 AS and add (accrued interest 15 g/h +interest amount on which TDS has been deducted )

(3) subtract the interest that has been credited into SB account from asset side

(4) add (accrued interest 15 g/h +interest amount on which TDS has been deducted ) to the previous year's closing balance

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

211715 Points Posted on 28 May 2019

Sorry to say. I have not understood your stand...

Practically, we follow as detailed below...

1. Sav bank interest is credited every quarterly to each saving account separately, so do not mix it with taxable FD interest, but make independent ledger.. (easier to deduct 80TTA claim).

2. For few FDs one ledger is created for all FDs, otherwise separate FD ledgers are created under one FD head.

3. Accrued interest of all these Fds are accumulated in one ledger which is adjusted to form 26AS & TDS deduction.