How to write accounting entries for interest expenses on loans
Accounting entries for interest expenses on loans:
When accruing:
Borrow: finance charges
Credit: interest payable
When paying interest:
Borrow: interest payable
Credit: 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: finance costs
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 have debit must be 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 is 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 bank loans
The accounting treatment of bank loans is as follows:
1, when receiving the loan
Borrow: Bank Deposit
Loan: Long-term Borrowing
2, when accruing interest
Borrow: Finance Charge
Loan: Interest Due
This is the first time that a bank loan has been received. 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.