Question

journalise the 13 th entry : Borrowed from Ridhi @ 10% per annum interest.

Answer 1

Journal entries refer to the two sided entries with the same amount credited and debited at the same time in two accounts.

Here, cash account would be increased by 50,000 as this is the amount borrowed.

This will be debited.

Then is the interest @10% of 50,000, which will be 5000.

This interest will also be debited because it is an expense for the business.

The loan account will become 50,000 +5000 (interest) = 55,000

Thus, journal entry will be:

Cash a/c --------DR 50,000

Interest a/c -------DR 5,000

To Loan from Ridhi a/c ------- CR 55,000

Answer 2

Cash is borrowed from Ridhi which means Ridhi is our creditor. We will open 3 accounts - cash account, interest account and Ridhi account.

Journal entry for 13th transaction would be -

Cash a/c Dr. - Rs. 50,000

Interest overdue a/c Dr. - Rs. 5,000

To Ridhi's a/c - Rs. 55,000

Ridhi's a/c will be credited with the 10 % interest due to her at the end of the year.