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Entries in case of loan taken

Bhavesh (Accounts) (899 Points)

17 January 2014

What Entry has to be passed in case of Loan, Principal and interest in the books. Pls. explain thru. illustration

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3 Replies

niteshporwal (article assistant) (63 Points)
Replied 18 January 2014

Suppose installment amount is 20000 and from which pricipal is 5000 and interest is 15000 then entry will be loan account (principal amt) dr.5000 interest account dr.15000 To bank account 20000.......okk

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ARJUN ASHOK (CA Industrial Trainee) (125 Points)
Replied 18 January 2014

EMI paid Rs.10,000/- (principle Rs.8000 & int Rs.2000)

Loan a/c Dr. 8,000.00

Interest on Loan a/c Dr. 2,000.00

To Bank a/c 10,000.00

Pradeep Gupta (Accounts Manager) (298 Points)
Replied 23 January 2014

1. When Loan was taken from Bank/Financial Instution amounting to Rs.20 L.

XYZ Bank A/c Dr. Rs.20L

To, ABC Bank- Loan A/c Rs.20L

(Being Loan amt recd)

2. When Interest on loan is accrued at the month end (From EMI Statement we can know that how much is for Interest & how much is for principal, Suppose Total EMI = Rs. 30,000 out of which Principal: Rs.20,000 & Interest Rs.10,000) :-

Interst on Loan A/c Dr. Rs.10,000

To, Interst on Loan (Payable) A/c Rs.10,000

(Being JV paased for accrual of Interest on Loan)

3. At the time of making payment:-

ABC Bank - Loan A/c Dr. Rs.20,000

Interest on Loan (Payable) A/c Dr. Rs.10,000

To, XYZ Bank A/c Rs.30,000

(Being Loan EMI Paid)