Question

what is the journal entry when interest allowed on deposit for 1800 by bank
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Answer 1

Answer:

Bank a/c Dr.

To Interest received a/c

Explanation:

when bank pays us interest, our balance with bank increases, so bank is a receiver in a way, so it is debited.

Answer 2

Answer:

Journal entry for received interest from the bank:

Bank A/c … Dr

To Bank interest A/c

[Being the received bank interest]

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

Interest A/c Credit because the Interest is (Nominal Account) and one type of Income and Income is also Credit. Based on the Debit and Credit or Golden Rules.