*
Loan Given is our asset on which we will earn interest income
*

####
*
***
Entries are as follows
**

**Entries are as follows**

*
*

*
Entry for Loan Given
*

*
Loan A/c Dr
*

*
To Bank
*

*
*

*
Entry for Interest Income
*

*
Loan A/c Dr
*

*
To Interest Income
*

*
*

*
Entry for Amount Received on Maturity of Loan
*

*
Bank A/c Dr
*

*
To Loan A/c
*

*
*

*
*

*
Pass Entries
*

*
Loan given to Vimal Trading Co Rs 200000
*

*
Vimal Trading Co repaid in 4 monthly instalments of 60000 each (50000 principal + 10000 interest)
*

**
At the time loan was given:
**

Vimal Trading Co. A/c Dr 200000

To Bank A/c 200000

(Being loan given to vimal)

**
At the end of 1
^{
st
}
month:
**

**
Interest on Loan Due to Vimal Trading Co:
**

Vimal Trading Co. Dr 10000

To Interest Income A/c 10000

**
Receiving of 1
^{
st
}
Installment
**

Bank A/c Dr 60000

To Vimal Trading Co. A/c 60000

**
At the end of 2
^{
nd
}
month:
**

**
Interest on Loan Due to Vimal Trading Co:
**

Vimal Trading Co. Dr 10000

To Interest Income A/c 10000

**
Receiving of 2
^{
nd
}
Installment
**

Bank A/c Dr 60000

To Vimal Trading Co. A/c 60000

**
At the end of 3
^{
rd
}
month:
**

**
Interest on Loan Due to Vimal Trading Co:
**

Vimal Trading Co. Dr 10000

To Interest Income A/c 10000

**
Receiving of 3
^{
rd
}
Installment
**

Bank A/c Dr 60000

To Vimal Trading Co. A/c 60000

**
At the end of 4
^{
th
}
month:
**

**
Interest on Loan Due to Vimal Trading Co:
**

Vimal Trading Co. Dr 10000

To Interest Income A/c 10000

**
Receiving of 4
^{
th
}
Installment
**

Bank A/c Dr 60000

To Vimal Trading Co. A/c 60000