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Query on accrued int. on fixed deposit-pls help

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Aparna Sekar

Srirangam

92 Points Posted on 18 February 2013

In one of our clients' books, the FD Int. received seemed much less, compared to the actual deposit. While checking the entry, it was found that an amount of Rs. 19430, has been debited, reducing the income. The same amount has been previous year's accrued interest.

We thought it was wrong, as the entry have to be

Bank A/c dr.

to Int accrued.., not FD Int received a/c dr,. as found in client's books. But, we were told by our senior that it is the reverse entry, and is correct, and were asked to get Int. certificate.

IS IT CORRECT, AND EVEN IF WE RECEIVE INT. CERTIFICATE, HOW TO COMPARE AND ACCOUNT, WHETHER AFTER DEBITING THE SAME 19430 FROM ACTUAL INT FOUND IN CERTIFICATE?

THANKS A LOT! BUT, CAN YOU PLS DO THE SAME WITH FIGURES?

Replies (1)

sans9x CA,CMA,CS

general manager

46 Points Posted on 18 February 2013

the following entries will be passed for accounting interest portion-

Bank a/c dr

to Interest a/c

( being the amount received as interest on FD)

Interest accrued on FD ac dr

to Interest a/c

(being the interest accrued but not received on FD)

Interest ac dr

to profit and loss ac

(being the interest income trasferred to profit and loss ac)

ENTRIES IN THE SUBSEQUENT YEAR..

Interest ac dr

to interest accrued but not due

( being the reversal entry)

Bank account dr

to interest ac

(being the interest amount received against the accrual)

instead of above 2 entries a single entry can be passed as follows-

Bank ac dr

to Interest accrued but not due..

So, wat ever your senior told is correct..

apart from this..

to get the actual interest received during a perticular year you have to add both interest received during the year(apart from last years accrual) and current year accrual portion.,

Hope this would clarify your doubt..