journal entry for loan payment and receipt

Journal entry for loan payment and receipt

 

When loan is taken

When the loan is taken it a Liability for the firm.


Example: Journal entry for loan payable

Suppose A purchased a car on loan for Rs 200000 by a firm then the following entry will be the pass.

In this case, loan taken from the bank is a liability for A as he has to pay the money in future.

Car A/c                  200000

To Loan A/c                    200000

(being car purchased on loan)

Pay Ist instalment of loan which includes 2000 principal amount and 3000 as interest amount.

Therefore the journal entry will be

Loan A/c Dr                            2,000

interest on loan A/c Dr           3000

To Bank A/c                             5000

(being instalment of loan is given)

Similarly, another instalment is paid to a bank here interest on the loan is the expense of expense for a and Loan is debited to decrease the liability.In this way, we pass the entry every month till the liability of loan is set to nullify.

In this case loan principal amount and interest on a loan is shown separately in books of accounts.

 

Accounting equation of received a loan will be

Asset = Capital + liabilities

car = capital + Loan

200000 = 0 + 200000

200000 = 200000

When loan is given

When loan is given then its an Assets for the firm

when the loan is given to the employee

The loan has taken by the employee for purchasing a Car Rs 300000.

In the above transaction loan taken by the employee is an asset for an organization.

Journal entry for the above will be.

Loan took by employee A/c Dr.  300000

To Bank/Cash A/c 300000

(being loan is taken by employee )

Now employee has to make payment of a loan in 30 equal instalments of 10,000 each if his salary is Rs 40000 the journal entry will be.

Salary A/c 40,000

To Loan taken by employee A/c 10,000

To bank A/c    30,000

(being salary paid to employee and loan adjusted)

Example of Loan repayment.

Ravi took Loan from Rahul for Rs 20000.

The journal entry in the books of Ravi

Cash A/c Dr 20000

To Loan from Rahul A/c 20,000

(being loan was taken form Rahul)
Note: Loan is the liability for Ravi, therefore, its shows Cr balance.

Journal Entry in the book of Rahul

Loan is given to Ravi A/c Dr 20,000

To cash a/c   20,000

(being loan was given to Ravi)

Note: Loan given to Ravi is an asset in the book of Rahul, therefore, it has debit balance when loan is given

 

Journal entry for repayment of loan

Ravi repays the loan to Rahul Rs 20000 and interest amount Rs 2000.

Journal entry in the book of Ravi

Loan form Rahul A/c Dr

To Cash A/c Dr 22000

(being loan repay it, Rahul)

Journal entry in the book of Rahul

Loan payment received with interest 20000 and interest rs 2000.

Cash A/c Dr 22000

To loan Given to Ravi A/c 20.000

To interest on loan A/c 2000

(being loan given received back)

how to make loan entry in tally

Now to make loan entry in tally

Example :

Mr Aviansh took the loan from Bank to purchased a Car Rs 400000.

We have to make two ledgers

  1. Go to gateway of tally >accounts info >create ledger>Loan from bank under Loan and liabilities

Loan from bank in tally

  1. Go to gateway of tally>accounts info >crete ledger > bank under bank

Go to GOT(gateway of tally>accounting Voucher f6 (receipt)

http://thevistaacademy.com/wp-content/uploads/2015/08/Receipt-a-loan-in-tally.png

Avinash pays an instalment of loan  Rs 20,000 which include 15000 as a principle and 5000 as interest on Loan.

The journal entry for the same will be

Laon from Bank A/c Dr 15000

Interest on Loan A/c Dr 5000

To bank A/c 20,000

(being instalment of loan is paid )

here interest on a loan is the expense for Avinash, therefore, it will be treated as an Indirect expense in the tally

this entry will be made in accounting Vouchers payment F5

 

Journal entry of loan in books of  borrower & lender

In the books of borrower In the books of Lender
When loan is taken

Bank A/c  Dr

To loan A/c

In the books of lender

Loan A/c

To bank A/c

When principal and interest amount is paid

Loan A/c Dr

Interest A/c Dr

To bank A/c

When interest and principal amount is received

Bank A/c Dr

To loan A/c

To interest A/c

 

 

Also see: Journal entry of cheque bounce

Also see: Journal entry of Furniture

3 Comments

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  1. Mun mun ko 9500 se full setalment kiya
    Ye kaise ho plz

  2. Thanks for helping me in these accounting questions

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