Loan Repayment

This query is : Resolved

VARUN.C.DAS

VARUN.C.DAS (Querist)
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19 August 2010 Dear All,
Sir here the company taken 11 Nos Loan from Banks they first calculate all thew interest and booked it as an asset (interest suspense)and after that on payment the entry is booked as like this
Suppose the loan is 100000 from HDFC Bank
EMI is 3778
Loan tenor is 36 Months
Total interest is 36000
the 36000 is transfered to Interest suspense
the entry is
HDFC A/c Dr 3778
Interest (P&L)1000
To,Interest suspense 1000
TO,Bank 3778
Which is right /Not

Second
I have repayment schedule if i can't paid the instalment currectly can i booked the the interest as expense ?

CA. BIJENDER KR. BANSAL

CA. BIJENDER KR. BANSAL (Expert)
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19 August 2010 By this way you have to book Loan Account from HDFC with amount 3778 muliply 36 = 136000/-
agaisnt which you will shown interest suspense account of Rs. 36000 in assest a/c.

You can do this.
But it is better to book loan amount at pricipal i.e Rs. 100000/-
As when you pay instalment, then booked interst as expenses
like HDFC 2778
Interst 1000
To Bank 3778.

Second : Until & unless you have not paid instalment , then you can't booked interest as expense.
Interest will be booked as interst when you will paid it.