Question

What is the Journal entry for interest allowed by bank.. with explanation?

Answer 1

Answer:

bank A/c. Dr.

to interest received A/c

Explanation:

as bank is a personal acc ...it received interest so debit the receiver and interest is added to our bank so it increases bank amount so it is credited

Answer 2

Answer:

Transaction : Interest allowed by bank

Journal Entry :

Bank Account A/c-------------------Dr

           To Interest Received A/c

(Being interest received from bank)

Explanation:

As per Nominal account rule, all expenses must be debited and incomes must be credited. Therefore, interest received from bank is credited.

As per real account rule, all assets coming into the entity are to be debited and assets going out of the entity should be credited. As funds are received in bank, bank account is debited.

As per bank, Bank a/c is a artificial legal person.