Interest on fixed deposits

It is better to get an Interest Certificate from the Banker regarding the Interest credited either in SB or with FD.

Journal Entries:

1. At the time of booking a fixed deposit:

Investment in fixed deposit….. Dr.
To, Bank A/c

2(a). Entry for accrued interest (in case of no TDS):

Accrued interest on fixed deposit…… Dr
To, Interest on fixed deposit

2(b). Entry for accrued interest (in case of TDS):

Accrued interest on fixed deposit…… Dr
TDS u/s 194A (AY xx-xx)…….Dr
To, Interest on fixed deposit

3(a). At the time of maturity (if not renewed further)
.
XYZ Bank……..Dr.
To, Investment in fixed deposit
To, Accrued interest on fixed deposit 

3(b). At the time of maturity (if renewed further/roll-over)

Investment in fixed deposit ………..Dr.
To, Investment in fixed deposit
To, Accrued interest on fixed deposit

Add the last four digits of fixed deposit account number with the ledger name for ease of maintenance or else you can use cost centre feature too for maintaining FD wise details, if there are plenty.

dear sir

thanks for the clarification, the ledger namely " accrued interest on fixed deposit" I guess will be an asset a/c.(receivable)

Originally posted by : Edward Aranha
	dear sir thanks for the clarification, the ledger namely " accrued interest on fixed deposit" I guess will be an asset a/c.(receivable)

Yes, Current Asset.