Term Loan refers to Loan taken for limited period of time.
Whole amount including Interest is repaid either together at once or in instalments (EMI)
Entry for Loan Taken
Bank A/c Dr
to Loan A/c
Entries for Interest
Interest A/c Dr
To Loan A/c Dr
Entry for Loan Repaid
Loan A/c Dr
To Bank A/c
LOAN ENTRIES ASSIGNMENT
Pass Entry for Loan taken, Interest and Principal Repayment.
Unsecured Loan
Unsecured Loan taken from Akash & Co Rs 50000 @ 12% p.a.
Amount received by cheque.
It was repaid after 6 months together with Interest
View answer
At the time loan was taken:
Bank A/c Dr 50000
To Akash and Co (12%) Loan A/c 50000
( Being amount of loan received)
Interest Expense A/c Dr 3000
To Akash and Co (12%) Loan A/c 3000
( Being interest on loan charged)
At the time of repayment of loan :
Akash and Co (12%) Loan A/c Dr 53000
To Bank A/c 53000
(Being loan amount repaid.)
Secured Loan EMI
Term Loan was taken from PNB Bank 100000.
It was to be repaid in 4 monthly EMI of Rs 25628 as follows
Principal and Interest repayment chart (as given by Bank)
|
Month |
Op Balance of Loan |
EMI Repaid |
Interest Component |
Principal Component |
Closing Balance of loan |
|
1 |
100000 |
25628 |
1000 |
24628 |
75372 |
|
2 |
75372 |
25628 |
754 |
24874 |
50498 |
|
3 |
50498 |
25628 |
505 |
25123 |
25374 |
|
4 |
25374 |
25628 |
254 |
25374 |
0 |
|
|
Total |
102512 |
2512 |
100000 |
|
View answer
At the time loan was taken:
Bank A/c Dr 100000
To PNB Loan A/c 100000
( Being amount of loan received)
End of month 1:
Interest Expense A/c Dr 1000
To PNB Loan A/c 1000
(Being interest expense booked)
PNB Loan A/c Dr 25628
To Bank A/c 25628
(Being loan repaid)
End of month 2:
Interest Expense A/c Dr 754
To PNB Loan A/c 754
(Being interest expense booked)
PNB Loan A/c Dr 25628
To Bank A/c 25628
(Being loan repaid)
End of month 3:
Interest Expense A/c Dr 505
To PNB Loan A/c 505
(Being interest expense booked)
PNB Loan A/c Dr 25628
To Bank A/c 25628
(Being loan repaid)
End of month 4:
Interest Expense A/c Dr 254
To PNB Loan A/c 254
(Being interest expense booked)
PNB Loan A/c Dr 25628
To Bank A/c 25628
(Being loan repaid)
Term Loan for Asset Purchase
Building purchased for 100 lacs.from Ajay Properties on 1 July 2016
Amount spent on further construction =20 lacs
Total Project Cost=120 lacs
ICICI Bank gave loan at 75% of project cost @ 10% p.a
(120 lacs*75%=90 lacs)
Whoie amount repaid after 6 months including interest
Construction was complete by 31 Aug 2016
Pass Entries for Asset Purchased,Loan Taken,EMi and Interest Repaid
View answer
On 1 st july:
Building WIP Dr 10000000
To Ajay Properties A/c 10000000
(Being building purchased.)
Loan from ICICI bank:
Bank A/c Dr 9000000
To ICICI 10% Loan A/c 9000000
( Being loan amount received.)
Building WIP Dr 2000000
To Bank A/c 2000000
(Building construction charges)
Interest on loan from ICICI bank (1 st july to 31 st August 2016)
Building WIP A/c Dr 150000
To ICICI 10% Loan A/c 150000
(Being interest on loan during construction is capitalized.)
Interest on loan from ICICI bank ( 31 st August 2016 to 31 st December 2016)
Interest On Loan A/c Dr 300000
To ICICI 10% Loan A/c 300000
(Being interest on loan charged after Construction Completed booked as expense)
Building Dr 13500000
To Building WIP Dr 13500000
(Being construction of building finally completed.)
Repayment of loan:
ICICI 10% Loan A/c Dr 9450000
To Bank A/c 9450000
( Being loan repaid.)
Term Loan for Asset Purchase +EMI
Resolve last question assuming EmI for Loan is 1544053 for 6 months as
| Month | Op Balance of Loan | EMI Repaid | Interest Component | Principal Component | Closing Balance of Loan |
| July | 9000000 | 1544053 | 75000 | 1469053 | 7530947 |
| Aug | 7530947 | 1544053 | 62758 | 1481295 | 6049652 |
| Sept | 6049652 | 1544053 | 50414 | 1493639 | 4556013 |
| Oct | 4556013 | 1544053 | 37967 | 1506086 | 3049926 |
| Nov | 3049926 | 1544053 | 25416 | 1518637 | 1531289 |
| Dec | 1531289 | 1544053 | 12761 | 1531292 | 0 |
Pass Entry for Loan taken, Interest and Principal Repayment.
View answer
On 1 st july:
Building WIP Dr 10000000
To Ajay Properties A/c 10000000
(Being building purchased.)
Loan from ICICI bank:
Bank A/c Dr 9000000
To ICICI 10% Loan A/c 9000000
( Being loan amount received.)
Building WIP Dr 2000000
To Bank A/c 2000000
(Building construction charges)
At End of July:
Building WIP A/c Dr 75000
To ICICI 10% Loan A/c 75000
(Being interest expense capitalized)
ICICI 10% Loan A/c Dr 1544053
To Bank A/c 1544053
(Being loan repaid)
At End of August:
Building WIP A/c Dr 62758
To ICICI 10% Loan A/c 62758
(Being interest expense capitalized)
ICICI 10% Loan A/c Dr 1544053
To Bank A/c 1544053
(Being loan repaid)
At End of September:
Interest Expense A/c Dr 50414
To ICICI 10% Loan A/c 50414
(Being interest expense charged)
ICICI 10% Loan A/c Dr 1544053
To Bank A/c 1544053
(Being loan repaid)
At End of October:
Interest Expense A/c Dr 37967
To ICICI 10% Loan A/c 37967
(Being interest expense charged)
ICICI 10% Loan A/c Dr 1544053
To Bank A/c 1544053
(Being loan repaid)
At End of November:
Interest Expense A/c Dr 25416
To ICICI 10% Loan A/c 25416
(Being interest expense charged)
ICICI 10% Loan A/c Dr 1544053
To Bank A/c 1544053
(Being loan repaid)
At End of December:
Interest Expense A/c Dr 12761
To ICICI 10% Loan A/c 12761
(Being interest expense charged)
ICICI 10% Loan A/c Dr 1544053
To Bank A/c 1544053
(Being loan repaid)