It refers to those income which we have earned but due date of receiving them has not yet arised
Example
- FD Made,not yet Matured
- Loan given,interest not yet due
We book income on this as Accrued Income
Entry for Accrued Income
Asset Dr
To Income
or
Accrued Income Dr
To Income
Note:- Accrued Income is Current Asset
Assignment
Pass Entry assuming Company follows annual closing
1.Loan given to Mr Darshan Rs 500000 @ 14% p.a.for 6 months on 1 March
Pass Entry for
- Loan Given
- Interest Accrued on Loan as on 31 March
- Balance interest
- Loan Repaid
Company follows annual closing
View answer
Case 1:
Loan given on 1 st march
Darshan loan A/c Dr 500000
To Bank A/c 500000
Interest accrued on 31 st march
Accrued interest A/c Dr 5833
To Interest income A/c 5833
After 5 months:
Accrued interest A/c Dr 29167
To Interest income A/c 29167
When loan amount was received
Bank A/c Dr 535000
To Darshan A/c 500000
To Accrued interest A/c 35000
2. FD Made of 500000 @ 8% for 1 month on 29 March
Pass Entries for
- FD Made
- Interest Accrued on FD as on 31 March
- Balance Interest
- FD Repaid
View answer
At the time FD was made on 29 th march
8% FD A/c Dr 500000
To Bank A/c 500000
On 31 st march interest accrued on FD
8% FD A/c Dr 222
To Interest Income A/c 222
(500000*8%*1/12*2/30)
Entry for balance interest accrued on FD
8% FD A/c Dr 3111
To Interest Income A/c 3111
(500000*8%*1/12*28/30)
At the time FD was matured and amount received
Bank A/c Dr 503333
To 8% FD A/c 503333