How to Write Accounting Entries for Loan Interest Expense
Accounting Entries for Loan Interest Expense:
When Accruing:
Borrow: Finance Expense
Loan: Interest Payable
When Paying Interest:
Borrow: Interest Payable
Loan: Bank Deposit
Interest expense is interest expense on temporary borrowings. Under the precondition that the bookkeeping basis for the production of cash and payment, the so-called expenditure should be based on the actual payment, that is, the flow of funds out of the health insurance institutions, marking the reduction of cash and bank deposits. In terms of interest expenses, to the individual account interest, its funds did not flow out of the health insurance institutions, cash, bank deposits did not decrease, therefore, to the individual medical account interest should not be charged as interest expenses.
Interest expense refers to the enterprise short-term borrowing interest, long-term borrowing interest, interest on notes payable, discounted interest on notes, interest on bonds payable, long-term interest payable on the introduction of foreign equipment, and other interest expenses (in addition to capitalized interest) minus bank deposits, such as the net amount of interest income.
Loan interest accounting entries how to do
Loan interest for the borrowing enterprise is a financial expense, the payment of the entry is as follows:
Borrowing: financial expenses
Credit: bank deposits
If only accrued, not paid, the entry is as follows:
Borrowing. Finance costs
Credit: Interest payable
Accounting entry method:
Layered analysis method
Layered analysis method refers to the process of the development of things into a number of phases and levels, layer by layer progressive analysis, so as to ultimately come up with the results of a problem-solving approach. The use of stratification method for preparing accounting entries teaching intuitive, clear, can achieve the desired teaching results, the steps are as follows:
1, analyze the list of accounting entries involved in economic operations.
2, analyze the nature of accounting accounts, such as asset accounts, liability accounts.
3, analyze the change in the amount of increase or decrease of each accounting account.
4, according to steps 2 and 3 in conjunction with the economic content (increase or decrease) reflected in the debit and credit sides of the various types of accounts to determine the direction of the accounting account.
5, according to there must be debit and credit, debit and credit must be equal to the rules of bookkeeping, the preparation of accounting entries.
This method is very effective for students to be able to accurately know the accounting operations involved in the accounting accounts, and more applicable to the preparation of individual accounting entries.
Business chain method
The so-called business chain method means that according to the sequence of accounting operations, a continuous business chain, before and after the business of the accounting entries between the existence of a connection between the preparation of accounting entries.
This method is more effective for the continuity of economic operations, especially for the direction of easy to mistaken accounting more obvious.
The bookkeeping rules method
The so-called bookkeeping rules method refers to the use of bookkeeping rules, "there must be a credit, borrowing and crediting must be equal" for the preparation of accounting entries.
How to make accounting entries for interest paid on bank loans
Accounting entries for interest paid on bank loans: If the conditions for capitalization are not met, the time of accrual, debit: finance costs; credit: interest payable. Payment: debit: interest payable; credit: bank deposits. If you meet the conditions for capitalization: when accrued, debit: construction in progress and other subjects; credit: interest payable. When paid: debit: interest payable; credit: bank deposits.
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A, loan interest
1, loan interest, is the lender because of the issuance of monetary funds from the borrower's remuneration, but also the borrower to use the funds must pay the price. Bank loan interest rate is the ratio of the amount of interest to the principal amount over the term of the loan. To determine the interest rate of a loan contract with a financial institution such as a bank as the lender, the parties can only negotiate within the range of the upper and lower limits of the interest rate stipulated by the People's Bank of China. A high interest rate on a loan raises the amount to be repaid by the borrower after the term of the loan, and vice versa. Determine the interest rate of the loan of three major factors: the loan amount, loan term, loan interest rate.
2, the loan trap
Loan interest, it is natural, but in the processing of the loan before you have to pay the interest, which is from where it is based? In the network can be seen around a lot of "only with the ID card for loans, the same day release, no collateral, no guarantee" and so on eye-catching loan small ads. It is these attractive small ads, so that those who are in urgent need of funds inadvertently "in the set".
Loan first pay interest, is a lot of loan scammer's usual trick. A formal lending institution will not require payment of fees in advance. Especially beware of off-site loans and the so-called payment of loan interest after the release of money and other ways, which may be irregular loans. For loans, it is crucial for loan applicants to have a sense of self-risk prevention, and sometimes a little more consideration and calmness will eliminate a lot of unnecessary losses.
3, loan interest rates and interest
"General Rules for Loans" stipulates:
① Determination of loan interest rates: the lender shall determine the interest rate for each loan in accordance with the upper and lower limits of the lending rate specified by the People's Bank of China and set out in the loan contract;
② Interest on the loan is accrued: the lender and the borrower shall, in accordance with the loan contract and the People's Bank of China The lender and the borrower should be in accordance with the loan contract and the People's Bank of China, the relevant provisions of the interest accrued or delivered on a regular basis. Loan extension period plus the original period to reach a new interest rate bracket, from the date of extension, according to the new period bracket interest rate. Penalty interest is charged on overdue loans in accordance with the regulations.
③Subsidized interest on loans: According to the national policy, in order to promote the development of certain industries and regional economy, the relevant departments may subsidize the interest on loans. For the loans subsidized by the relevant departments, the contracting banks shall independently review and issue them and strictly manage them in accordance with the relevant provisions of the General Rules for Loans.
4. Suspension, reduction and waiver of interest on loans: except for the provisions of the State Council, no unit or individual shall have the right to decide on suspension, reduction, and waiver of interest. The lender shall, in accordance with the decision of the State Council, specifically handle the suspension, reduction and waiver of interest in accordance with the scope of its duties and authority.
Loan interest accounting entries how to do
Accrued:
borrow: financial expenses, research and development expenditure, construction in progress, etc.,
credit: interest payable,
actually paid:
borrow: interest payable,
credit: bank deposits, etc.
Interest payable refers to the interest payable by the enterprise in accordance with the contract, including short-term borrowings, long-term borrowings with interest paid in installments and repayment of principal at maturity, and interest payable on corporate bonds.
Interest payable content:
Interest on short-term borrowing;
Interest on long-term borrowing paid in installments;
Interest on bonds payable paid in installments.
Interest on notes payable is not included in the "Interest payable" account (it is included in "Notes payable").
Interest on long-term loans and bonds payable that are repayable in one installment is not included in "interest payable" (long-term loans - accrued interest, bonds payable - accrued interest).
How to make accounting entries for bank loans
The accounting treatment of bank loans is as follows:
1, when the loan is received
Borrow: bank deposits
Loan: long-term loans
2, when the interest is accrued
Borrow: financial expenses
Credit: interest payable
3, monthly repayment and interest
Borrow: interest payable
Loan: bank deposit
Borrow: long-term loan
Loan: bank deposit
4, if the repayment is made after the repayment of the following:
Borrow: finance costs - loan interest
Credit: bank deposits
Extended information
Long-term borrowing can be divided into: policy bank loans, commercial bank loans and loans from other financial institutions.
1, policy bank loans refers to the implementation of national policy loan business of the bank to the national key construction projects or local government construction projects to issue loans, usually long-term borrowing.
such as the National Development Bank to meet the financial needs of enterprises to build key national projects and provide loans, but also includes the amount of export credit.
2, commercial bank loans refers to the commercial banks to provide loans to enterprises to meet the needs of enterprise production and operation funds, including long-term and short-term loans.
3. Loans from other financial institutions mainly refer to the trust investment loans in the form of money and in kind obtained by the Trust and Investment Company; various commercial medium- and long-term loans obtained from finance companies; and insurance loans obtained from insurance companies for engineering, property and other insurance.