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

 

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)

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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

 

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  1. Accounts and Finance
  2. Step 2 Passing Routine Entries
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About the Author

CA Maninder Singh's photo - Expert in Practical Accounts, Taxation and Efiling
CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 6 years. He provides courses for Practical Accounts, Taxation and Efiling at teachoo.com .
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