journal entry for loan payment and receipt
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 pass.
In this case loan taken from 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 installment of loan which include 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 installment of loan is given)
Similarly other installment are paid to bank here interest on loan is expense for 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 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 to employee
Loan taken by employee for purchasing a Car Rs 300000.
In the above transaction loan taken by employee is an asset for an organization .
Journal entry for the above will be.
Loan taken by employee A/c Dr. 300000
To Bank / cash A/c 300000
(being loan taken by employee )
Now employee has to make payment of loan in 30 equal installment 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 taken form Rahul)
Note : Loan is liability for Ravi therfore its shows Cr balance .
Journal Entry in the book of Rahul
Loan given to Ravi A/c Dr 20,000
To cash a/c 20,000
(being loan 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 of repayment of loan
Ravi repay 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 ot 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
Mr Aviansh took loan from Bank to purchased a Car Rs 400000.
We have to make two ledgers
- Go to gateway of tally >accounts info >create ledger>Loan from bank under Loan and liabilities
- Go to gateway of tally>accounts info >crete ledger > bank under bank
Go to GOT(gateway of tally>accounting Voucher f6 (receipt)
Avinash pay installment of loan Rs 20,000 which include 15000 as 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 installment of loan is paid )
here interest on loan is expense for Avinash therefore it will be treated as Indirect expense in tally
this entry will be made in accounting Vouchers payment F5
Journal entry of loan
|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
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