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Journal entry of fixed deposit in Accounting

Journal entry of fixed deposit in Accounting

What are fixed Deposit provided by banks or NBFCs which provides investors a higher rate of interest than a regular savings account, until the given maturity date. It may or may not require the creation of a separate account.

Journal entry of fixed deposit:

Fixed deposit is asset for the business as its gives us economic benefits in coming future.

Example of fixed deposit

Make fixed deposit with the bank Rs 1,00,000 interest receivable on fixed deposit is rs 10,000 per annual .Fixed deposit mature after 3 year.make journal entry till maturity.

When Fd is made

Fixed Deposit A/c Dr 100000

To Bank A/c              100000

(being FD made with the bank)

At the end of first accounting Year.

Accrued interest on Fixed deposit A/c Dr   10,000

To interest on Fixed Deposit   A/c                      10,000

(being interest accrued)

At the end of second accounting Year.

Accrued interest on Fixed deposit A/c Dr   10,000

To interest on Fixed Deposit   A/c                      10,000

(being interest accrued)

 

At the end of third accounting Year.

Bank A/c Dr . 130,000

To Fixed deposit A/c     100000

To Interest on Fixed Deposit A/c                      20,000

To accrued interest on Fixed Deposit  A/c      10,000

Example of Fixed Deposit :

Make fixed deposit with the bank of Rs 100000 on 1 of December 2018 and interest receivable 12000 per annual.  Financial year closed on 31 march 2019.

Case 1 when interest is received Rs 12,000

Journal entry when Fixed deposit is made

Fixed Deposit A/c Dr.   1000000

To Bank A/c                       100000

(being fixed deposit made with the bank)

Case 1 when interest is received Rs 12,000.

Case 2 when interest is received Rs 2,000.

Case 3 No interest received

 

Case 1 when interest is received Rs 12,000

Here as we know that financial year closed on 31 march 2019 and fixed deposit made with the bank on 1 of December 2019 therefore interest receivable is 4000 but we got Rs 12000

Journal entry of the above will be

Bank A/c Dr 12,000

To Advance interest on FD A/c 8000

To interest on FD   A/c             8000

(being interest and advance interest on FD received)

 

Case 2 when interest is received Rs 2,000

Here as we know that financial year closed on 31 march 2019 and fixed deposit made with the bank on 1 of December 2019 therefore interest receivable is 4000 but we got Rs 2000

Journal entry of the above will be

Bank A/c Dr 2,000

Accrued  interest on FD A/c 2000

To interest on FD   A/c             4000

(being interest and accrued interest on FD received)

 

Case 3 No interest received.

Accrued interest on Fd A/c Dr 4000

To interest on Fd A/c                      4000

(being interest on FD receivable)

Case 3 No interest received


Updated: September 7, 2019 — 9:26 am

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