Interest and accrued interest on fd

This query is : Resolved

Tapash Kumar Biswas (Querist)
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26 May 2014 Dear Sir

I have an FD of Rs.6,97,620/-.
Rate of Interest is 8.75%.
Period : 21.12.13 to 21.12.14.

Bank provide me a interest certificate mentioning as follows :

Interest Amount : 15051/-
TDS Amount : 1692.60/-
Accrued Interest : 1875/-

Please advice me the Journal Entries need to charged in my books of Accounts.

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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26 May 2014 whether its a CO OR NON corporate or what is not mentioned.

Guest

Guest (Expert)

27 May 2014 yes mention is that a co or not

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Nikhil Kaushik

Nikhil Kaushik (Expert)
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27 May 2014 how does it matter whether it is co or non-co. the entries will depend on whether you follow accrual accounting or cash-basis.

Rupesh Jain

Rupesh Jain (Expert)
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27 May 2014 journal entry as under

interest accured a/c 1875
tds receivable a/c 1692.60
to interest on FDR a/c 16926

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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28 May 2014 nikhil it will matter since professionals follow cash basis and for companies under sec 209 of old co act 1956 they need to follow accrual sysytem of accounts.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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28 May 2014 who said professionals follow cash basis? you are generalizing...

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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28 May 2014 so u mean professionals follow accrual basis?

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Nikhil Kaushik

Nikhil Kaushik (Expert)
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28 May 2014 yes many do..I do...that is why i said that the relevant basis is the accounting method and not the nature of the entity.

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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28 May 2014 so if u do then others should do the same? that u meant?
i have seen most of professionals follow cash sysytem wat abt them ? are they wrong?

Nikhil Kaushik

Nikhil Kaushik (Expert)
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28 May 2014 no...no one is wrong. as an individual/firm etc have the option of choosing the accounting method.

therefore, I go back to my original argument that entry is based accounting method and not on the entity.

Even in case of individuals, certain incomes have to be necessarily be recognised on accrual basis such as Interest on cumulative deposit scheme of Government undertakings. Such interest has to be compulsorily offered to tax on accrual basis refer : No. 371 [F. No. 178/44/80-IT(A-I)], dated 21-11-1983.