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Fran_29's avatar
Fran_29
Experienced Cover User
1 year ago
Solved

Accrued Interest to Loan account

Hi, We have the Directors Loan with accrued Interest. To record to the General Journal with a credit to the loan account and a debit to an expense account ( Loan Interest) My question is: to proce...
general journal
  • Mike_James's avatar
    Mike_James
    1 year ago

    Hi Fran_29 , it is correct to show the interest as an expense,  as it relates to the period. The credit to the loan account shows that the business owes that amount, and it will remain there until it can be paid. The payment will debit the loan account, reducing the balance.

Mike_James's avatar
Mike_James
Ultimate Cover User
1 year ago

Hi Fran_29 , it is correct to show the interest as an expense,  as it relates to the period. The credit to the loan account shows that the business owes that amount, and it will remain there until it can be paid. The payment will debit the loan account, reducing the balance.

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