Interest accrued and due

756 views

Save Share

Join Us Follow Us Add as Source

sivaram

Asst Mgr-Taxation

5764 Points Posted on 30 September 2014

Dear All

How Interest accrued and Due is accounted can any one tell me what is stated in Schedule III?

When the doubt was raised by me whenever interest on loan is paid credit is given to Interest payable and not to loan account I am of the view that only principal portion goes to reduce the loan amount

But now I want to know what Schedule III speaks on this

can any one show the Journal entries as per Schedule III giving an imaginary illustration of loan taken and how principal and interest is accounted

Whether Interet accrued and Due is added to Loan amount?

Thanks in advance

Replies (2)

Rama chary Rachakonda

Master in Accounts & high court Advocate

7021 Points Posted on 20 October 2014

If the payment done on the 10th of each month relates to that particular month, then no provision is requried for March to be done in the books as the payment for March would have been done on the 10th of the month. However if payment ofr the current month is being made in the subsequent month then post the entry as follows on 31st MAr, Interest Expense A/c dr To- Interest payable. In the month of Apr post the below entry Interest Payable dr Loan A/c dr To- Bank