accounting entries- interest calculation

[durgasankar_innamuri]

Hi all,

Can any one tell me the accounting entries for interest paid/receive

Regards,

sankar

[Former Member · Accepted solution]

Hi,

Could you please elobrate a little more on the scenario. A normal accounting entry would be -

Interest paid A/c Dr XXXXX

Bank A/c Cr. XXXXX

or

Bank A/c Cr XXXXX

Interest Received A/c Cr. XXXXX

Please revert if you are looking for something more specific.

Thanks and Regards,

Anit

[durgasankar_innamuri · Accepted solution]

Hi anit,

Thanks for your response.

On vendor balances what will be the entry for interest

Vendor A/c Dr

To: Interest Receivable A/c Cr

On customer balances what will be the entry for interest

Interest Paid A/c Dr

To: Customer A/c Cr

Correct me if i am wrong.

Regards,

Sankar

[Former Member · Accepted solution]

Hi Durga,

On vendor balances what will be the entry for interest (If Paid)

Entry for Accruing (Business doesn't pay cash immediately)

Interest Expense A/c dr.

To Vendor A/c cr.

When Payment is made

Vendor A/c Dr.

To Cas/Bank A/c

On vendor balances what will be the entry for interest (If recieved)

Vendor A/c Dr.

To Interest recieved account Cr.

Cas/bank A/c Dr.

To Vendor A/c

Same rule applies for Customer.

Regards

Gaurav

[Former Member · Accepted solution]

Hi Durga,

Normally we need to pay to a vendor, and interest will be charged by the vendor on the outstanding. In such case, the entry will be -

Interest Paid A/c Dr XXXX

To vendor A/c Cr. XXXX

But in case the interest is being received for any advance or deposit with the vendor, the entry would be -

Vendor A/c Dr. XXXXX

To Interest Received A/c Cr. XXXXX

Similarly for customer in the 1st case (normal outstanding) will be -

Customer A/c Dr XXXX

To Interest Received A/cXXXX

In case of advance or deposits -

Interest paid A/c Dr. XXXX

To Customer A/c Cr. XXXX

Also check with the client - according to AS9 - they might not want to account for any interest receivable unless it is certain to be realised or actually realised.

Hope this helps.

Thanks and Regards,

Anit

[durgasankar_innamuri · Accepted solution]

Hi Gauravjain ,

Thanks for respones.

My doubt solved.

Regards,

Sankar