In order to reflect the principal, accrued interest and return of principal and interest on long-term loans, enterprises should set up a "long-term loans" account, which is credited to register the principal of the loan and the interest accrued in each period, and debited to register the return of principal and interest. The closing credit balance reflects the outstanding principal and interest on the loan.
(B) long-term borrowing accounting example
Example of an enterprise on January 1, 1.2 million yuan borrowed from the bank, the term of 3 years of borrowing for the purchase of fixed assets. Borrowing interest rate of 7% per annum, interest once a year, compound interest, due to return the principal and interest. The fixed asset reaches its intended useable condition at the end of the second year. Do the following accounting entries:
1. To obtain the loan:
Borrow: Bank Deposit 1200000
Loan: Long-term Borrowing 1200000
2. Assuming that all the long-term borrowing is used for the construction project in progress
Borrow: Construction Project in Progress 1200000
Credit: Bank Deposit 1200000
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(Note: If the long-term loan is used for development projects, it is debited to the "development costs" account)
3. The first year of interest accrued:
The first year of accrued interest: 1,200,000 × 7% = 84,000 (yuan)
The first year of monthly accrued interest: 84,000 ÷ 12 = 7,000 (yuan)
The first year of monthly accrued interest: 84,000 ÷ 12 = 7,000 (yuan) 12 = 7000 (yuan)
The monthly accounting entries for the first year are as follows:
Borrow: construction in progress 7000
Loan: long-term borrowing 7000
(Note: If the long-term borrowing is used for the development project, then the interest cost is debited to the "development costs" account)
4. The second year of accrued interest: (1200000 + 84000) × 7% = 89880 (yuan)
The second year of monthly accrued interest: 89880 ÷ 12 = 7490 (yuan)
The second year of the monthly accounting entries are as follows:
Borrowed: Construction in Progress 7490
Loaned: Long-term borrowings 7490
5. Third year accrued interest: (1200000 + 84000 + 89880) × 7% = 96171.6 (yuan)
Third year monthly accrued interest: 96171.6 ÷ 12 = 8014.3 (yuan)
Third year monthly accounting entries are as follows:
Borrowing: finance charges 8014.3
Credit: Long-term loans 8014.3
(Because the third year after the fixed assets have reached the state of intended use, so the third year of borrowing interest should be included in the financial expenses)
6. Borrowing due to return the principal and interest:
Principal and interest amount = 1200000 + 84000 + 89880 + 96171.6 = 1470051.6 (yuan) )
Borrow: long-term loan 1470051.6
Credit: bank deposits 1470051.6