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What is entry for Interest collected by bank od account

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Mayson

Others

40 Points Posted on 08 July 2015

Hello all, Pls I am doing BRS for the first time for the account type that is bank OveraDraft account. So question is in the bank statement in particulars column it is written "Int coll : 1-4-2014 to 30-4-2014" in the withdrawal column amt is rs. 30,000/- so what should be the entry ? Generally when bank collects interest entry is Interest a/c....Dr. To bank a/c...Cr. Now this is an OD account so pls guide me I have heard that in OD account entry will be opposite.

Replies (1)

Quick Summary

In an overdraft account, bank interest charged is debited as an expense and credited to the bank OD account. Entry: Interest on OD A c Dr To Bank OD A c. Maintain a separate OD interest account to track charges.

V P Narasimhan

Accounts Manager

795 Points Posted on 14 July 2015

A Company may have various a/c viz., Cash Credit, O D,Current A/c & so on. If we want to maintain Interest incurred on the paritucular a/c where we have more than one a/c we may open as follows:

O D Interest a/c

Interest - C A A/c

It will enable how much interest paid to the Bank at the end of a particular period.