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when i take the loan
passed journal as:
bank ac dr343875
charges dr6125
prepaid interest dr86752
bank loan cr436752
i made monthly entry for loan installment as:
loanac dr12132
casha/c cr12132
loan ineterst a/c dr2437
prepaid ineterest cr2437
now there is a balance of303300. i settled this loan for265000.
please tell me how to pass this cloasing entry to settle this entry
Closing entry for this Loan will be
Loan A/c Dr 303300
Bank A/c Cr 265000
Prepaid Interest Cr 38300
Need to close Prepaid interest A/c also. there will be a balance of59945 in Prepaid interest after deducting38300, there will be21645/- balance.
If company in profit we can settle this amont as interest expense in one time or other wise we can deduct monthly wise by the same way previousely done.
One time settlement of prepaid interest
Loan interest DR 21645
Prepaid Interest CR 21645
