Question

paid intrest on loan rs 1000write a journal entry

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Answer 1

Answer:

Journal entry for interest paid:

In case interest is paid by the bank

Interest A/c …….. Dr

To Bank A/c

[Being the interest paid by the bank]

In case interest is paid by the cash

Interest A/c …. Dr

To Cash A/c

[Being the interest paid by the cash]

Interest Paid A/c debit because the interest paid, so, this is one type of expense and expense are also debit. Based on the Debit and Credit or Golden Rules.

Bank A/c Credit because the bank is (Personal Account) and it is Giver, so Giver also Credit based on Debit and Credit Rule.

Cash A/c is assets and assets is (Real Account). Therefore Cash A/c Credit because of Cash a/c goes out, and any types of assets go out is credit based on the Debit and Credit Rules.

Rules:

Interest paid A/c - Nominal Account - Expenses - Dr

Bank A/c - Personal Account - Giver - Cr

Golden Rules:

Personal Account:

Debit the Receiver, Credit the Giver

Real Account:

What cames in Debit and what Goes out Credit

Nominal Account:

Expenses & Loss Debit, and Income, Profit Credit

I hope this answer helps you.

Cash Account - Real Account - Goes out - Cr