A Partnership Firm has been granted a certain amount of Term Loan. The Firm pays regular EMIs which are debited in the bank statement. . Should the accounting entry be as follows :
Term Loan A/c. .........Dr (Amount of EMI)
To Bank A/c.
Please advise.
regards.
No, it is incorrect, the entry should be splitted into Interest and Principal payment.
Thank you very much Sir. If you can help me with the following :
Term Loan sanctioned by Bank for the FY 2015-16 : Rs. 2,95,000
Amount availed upto 31.3.2016 : Rs. 2,25,000
Margin : 15%
Rate of interest : Floating (9.70+1+0.25)% ; i.e. 10.95 % at present.
EMI : To be repaid in 84 EMIs of Rs. 5084/- each.
EMIs debited in bank statement ( as a whole, without splitting between Principal & Interest ) as follows :
1 Feb., 2016 : Rs. 3865
29 Feb. 2016 : Rs. 3875.96
31 Mar. 2016 : Rs. 3865.48
Loan Sanctioned : December, 2015.
How much of each EMI sholud be debited to Principal (Term Loan A/c.) and how much should be debited to Interst on Loan A/c. ?
Waiting for your kind reply.
Regards.
Bankers will provide the loan repayment schedule. Please follow the same.
follow with your bank repayment schedule..
Instl. Amt. 11375 (example )
Pass Entry
Dr. Tream Loan A/C ......8314 ( principal )
Dr. Intrest A/C.............. 3061 (intrest )
Cr. Bank A/C................11375 ( Instl. amt )
Kindly note every time ( posting ) principal amt and interest amt. will change as per schedule..
Ask to bank to provide detail of all emi ( Principal + Interest )
Term loand Dr.
Interest Dr.
To bank
thank you everybody for your kind help.
Regards.
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