Dear All,
A compan has taken loan for 5 Years from a bank. EMI payment date is 10th April 2009. So basically, repayment is done 10th of every month i.e 10th April, 10th May..... Now for the purpose of audit, what is the Journal entry i.e For payment made in April 10th 2012.The company closes its financials on 31st March 2012. What are the accounting entries involved... Plz do help.
Mohit
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
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