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General Accounting Discussions: journal entries for loan interest

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    • CommentAuthorp442
    • CommentTimeJul 19th 2007
     
    What are the correct journal entries to record a start up loan and the interest that is to be paid? The interest has yet to be paid but needs to be kept track off. Thank you!
    • CommentAuthortaknevt
    • CommentTimeJul 25th 2007
     
    cash dr (receiving cash)
    loan cr (here the business person taking loan, it means the liability is increasing, so the loan acount has to credited to increase loan)

    outstanding intrest dr (interest still outstanding, so it has to added to Interest account-(expences losses debit))
    loan cr (the intrest is still outstanding it means it is a liability, so inorder to increase the liability the loan account has to be credited)
    Thankful People: p442
    • CommentAuthorp442
    • CommentTimeJul 25th 2007
     
    Thank you!

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