Question

interest on loan outstanding journal entry​

Answer 1

Answer:

Interest on loan A/c ..Dr.

To Loan A/c

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Answer 2

Answer:

Loans are a common means of seeking additional capital by the companies. They can be obtained from banks, NBFCs, private lenders, etc. A loan received becomes due to be paid as per the repayment schedule, it may be paid in instalments or all at once. Below is a compound journal entry for loan payment made including both principal and interest component;

Traditional Rules Applied

Loan Account (Personal) – Debit the Receiver

Loan Account (Personal) – Debit the ReceiverInterest Account (Nominal) – Debit all Expenses & Losses

Loan Account (Personal) – Debit the ReceiverInterest Account (Nominal) – Debit all Expenses & LossesBank Account (Personal) – Credit the Giver

Loan Account (Personal) – Debit the ReceiverInterest Account (Nominal) – Debit all Expenses & LossesBank Account (Personal) – Credit the GiverThe repayment of a secured or an unsecured loan depends on the payment schedule agreed upon between both the parties. A short-term loan is categorized as a current liability whereas the unpaid portion of a long-term loan is shown in the balance sheet as a liability and classified as a long-term liability.

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