10 January 2022
Sir, A person cash loans to debtors balances as on Dt:01-04-21 show in books value rs:10 lacs. Dt:20-05-21 cash paid (through on bank) rs:5 lacs Dt:19-08-21 cash from debtors (through on bank mode) rs:3 lacs. Debtors balances as on dt:31-12-21 rs:12 lacs Question: Assessess interest calculate on closing balance amount or transactions wise correct procedure.
10 January 2022
Generally, for debtors, the interest is calculated on no. of days the payment gets delayed (it is simple mode). It also depends upon the terms negotiated between both the parties. But for loans it is calculated based on the balance at the end of month.
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