Journal entry 21

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20 Points Posted on 23 October 2021

A company pays emi of Rs 75000- 60000 towards loan  and balance towards interest.  Account  for the payment

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On 23 October 2021 at 11:10 Report
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Quick Summary
This discussion clarifies the accounting treatment for loan repayments, specifically how to split the EMI amount between the loan principal and interest. It highlights that a portion of the EMI reduces the outstanding loan balance, while the remainder covers the interest accrued. The advice suggests methods for accurate allocation, especially for loans taken mid-year or when dealing with annual repayments.

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Practice
3235 Points Posted on 23 October 2021
Dr interest on loan 15000
Dr Loan account 60000
Cr Bank account 75000
(being EMI paid)
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On 23 October 2021 at 12:27
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My grammar is 💯 good I
7306 Points Posted on 23 October 2021

This is complex. Loan, if you took it n the middle of the year’s, you can pay 6 months clear out the current liabilities and show long term liability. If it is annual emi, then

take the loan amount and divide it by last year’s annuity factor which will give you interest and principle separately. 

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On 23 October 2021 at 12:29
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My grammar is 💯 good I
7306 Points Posted on 23 October 2021

I didn’t mean emi, lol an old habit. I meant repayment period

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On 23 October 2021 at 12:30
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Chartered Accountant
24588 Points Posted on 23 October 2021
Agree with abhay ji
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On 23 October 2021 at 13:59
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20 Points Posted on 24 October 2021
Thank you abhay ji and yasaswi
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On 24 October 2021 at 20:58

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