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Journal entry for interest on FD

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U S Sharma (glidor@gmail.com) (21056 Points)
Replied 18 July 2011

Originally posted by : rahul

AS INTEREST ON FDR IS RECEIVED ONLY AFTER MATURITY OF FDR SO WE HAVE TO SHOW INTEREST ON ACCRUAL BASIS SO U CANNOT JUST ADD THE INTEREST AMOUNT IN FDR.

not true

interest on FD has two options

a) payable monthly/ quarterly/yearly as opted, where the interest amount is credited as per mandate to given bank account.

b) cummulative .....where the interest amount is added to principal ( after deduction of tax at source) on quarterly/ half yearly/ yearly basis ( follow the TDS certificate for exact details of credit and tax deducted)

if you have netbanking facility then you can check that there is no separate account for interest accured, but gross amount is shown in the respective TDR/FDR

method of interest credit to respective FD is same as payable to bank account, however in cummulative option the interest credited also get eligible for interest earning on addition with FD principal.

if you ask for interest certificate from bank, what they provide ........

FD value as on 01-04 ......

interest accured ................ less TDS ...........(.....)

closing balance as on 31-03 ........

 

does they give you break up of interest accured and interest added for year ? 

 

you can track the FD interest yearwise, where you can get that interest amount is increased per year, what does it indicates ? as per your views .only FD is eligible to earn interest and interest accured is idle money in bank without earning any interest .

for accounting ease we do bi-fircate the same to get clear picture of FD principal and interest accured, but sum of both will not make any change. 

think logically too ..........

1 Like


PAWAN KUMAR LODH (STUDENT) (26 Points)
Replied 19 July 2011

I think entry pssed by Mr anshul is correct.


CA Ishfaq Baba (Practising) (60 Points)
Replied 31 July 2011

In my openion mudit is right..........we have to follow accrual system of accounting and we should keep in view AS-9...


Prakash Ramani (B.com,CA) (276 Points)
Replied 04 November 2011

F.D.A/C                                                DR.45,000

 TDS A/C                                              DR.5,000

                                    TO INTEREST RECEIVED ON F.D.  50,000

1 Like

Alay Thakor (Practicing Chartered Accountant)   (36 Points)
Replied 11 June 2014

I understand entry of FD interest with TDS amount but what will the treatment at the time of maturity of FD?. i.e. Difference due to TDS amount in FD maturity value. I thing maturity value of FD is more than actual book value of FD. What will be the treatment of that difference amount?




c Kamala raj (Student CA CPT ) (40 Points)
Replied 09 September 2015

hello the file that you attached is not clear what are you trying to explian 


Ganesh (Account Asst.) (21 Points)
Replied 18 July 2016

Hi all

Can anyone help me out to know, how to pass the journal entry for FD auto renewed with interest.

eg. 

I had invested Rs. 100,000/- in FD for 1 years

Next year FD get auto renewed with the amont 1,08,500/- (100,000 principle amont  + 8500/-interest amount)

Please suggest me how to pass journal entery for above mentioned example.

Thank you

Regareds

Ganesh

 

 


Kartikey Jain (Intern) (2377 Points)
Replied 03 July 2018

Current/Savings Bank A/c Dr.

     To FD A/c

      To Interest Receivable A/c

(being FD matured)

FD A/c Dr. 

      To Current/Savings Bank A/c

(being FD renewed)


akshay negi (pauri) (24 Points)
Replied 14 January 2019

I have faced problem, in fin yr 2017-18 i got to fd on dated 2.4.2017 and 24.3.2018 total amt is 3300000.

but in april 2018 i have close that a/c we generated payment and all fd amt was refunded but they are shown in balance sheet.

so my question is what entry i have entered.


akshay negi (pauri) (24 Points)
Replied 14 January 2019

I have faced problem, in fin yr 2017-18 i got two fd on dated 2.4.2017 and 24.3.2018 total amt is 3300000

but in april 2018 i have close that a/c we generated payment and all fd amt was refunded but they are shown in balance sheet.

so my question is what entry i have entered.

 




SHRADDHA THAKKAR (Job ) (46 Points)
Replied 29 July 2019

If a person makes FD with Bank for a period 6 months with the option automatic renewal than pls suggest me the accounting entries in tally. 

Suppose X comp. has make FD of Rs. 5 Cr with XYZ bank for a period of 6 months and the same will automatically renew along with interest amount say Rs. 5. 25 Cr. please explain to me how I will make an entry in Tally. ...


shahyar husain (1235 Points)
Replied 04 November 2020

Originally posted by : CA RAHUL AGARWAL

The correct entry will be as follows-

 

ACCRUED INTEREST ON FDR A/C       Dr.           45000

TDS RECEIVABLE A/C                               Dr.           5000

          TO INTEREST ON FDR A/C                                            50,000

 

FDR AMOUNT REMAINS FIXED TILL MATURITY SO CANNOT DR. FD A/C TILL MATURITY.

 

ON MATURITY OF FDR FOLLOWING ENTRY WILL BE PASSED-

 

BANK A/C     Dr.               13,00,000

   TO FDR A/C                                                12,50000

   TO ACCRUED INTEREST ON FDR A/C        50,000

 

THIS IS THE TOTALLY CORRECT WAY FOR FDR OR NSC OR PPF




 

     

 

 

What is the entry of interest accrued on FD?


jayshree (Others) (22 Points)
Replied 13 December 2020

I have not taken last year interest on fd on asset side not in income too.now this year i have taken current year interest to investments so there is diffrence in acual fd s and balancesheet fds amount .so how i can adjust that diffrence in balancesheet.pls guide

M Venkat (CA finalist) (456 Points)
Replied 08 January 2021

The entry and explanation given by Mudit is right.




Ritik Chopra (student) (8118 Points)
Replied 13 February 2021

The above answer by Mudit is correct



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