Question

interest on loan given in the trail balance which side record p&l a/c or balance sheet???​

Answer 1

Explanation:

Interest paid on bank loan is an indirect expense and is debited to the profit and loss account as it is a charge against profit. In the case the total interest paid for the year is 12% of Rs 40000 i.e., 4800. The interest already paid is Rs 3800, the remaining Rs 1000 has to be paid as it is a charge against the profit. Thus Rs 1000 will be debited to the profit and loss account to pay the full amount of interest.