Loan from lic

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

15 December 2011 My boss had taken a loan from one of his LIC policy for doing business. Now that policy is matured. LIC has deducted there loan amount along with interest and balance has been paid back.
I want to know what is the book entry to be made in his books of accounts.

CA S P BHATNAGAR

CA S P BHATNAGAR (Expert)
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15 December 2011 LETS TAKE AN EXAMPLE
LET US CONSIDER THE MATURITY AMOUNT OF YOUR BOSS POLICY BE 100000/- FROM WHICH HE AVAILED 50000/- AS LOAN NOW ON MATURITY DATE SUPPOSE INTEREST ON LOAN AMOUNTS TO 10000/- THE JOURNAL ENTRY WOULD BE-
LOAN A/C DR. 50000
INTEREST ON LOAN A/C DR. 10000
BANK A/C DR. 40000
TO BOSS CAPITAL A/C 100000
( LOAN A/C HAS BEEN DEBITED BECOZ NO LOAN A/C NOW EXISTS, INTEREST IS AN EXPENSE FOR HIM AND BALANCE AMT IS RECEIVED ON MATURITY ON HIS BANK A/C)