Which Journal Entry will you pass when you receive a Long Term Loan?

Example: You received loan on1-1-2014  25000 and interest rate is10% PA.  You have to pass entry as follows

Date:

Bank Account      Dr            25,000.00

To Bank Loan Account                        25,000.00

 

Date:     Interest Entry

Interest on Bank Loan A/C      Dr            208.33

To Interest Outstanding A/C                        208.33

 

While loan receiving time we getting only loan amount. Thats why we need only to enter loan amount. Because that time interest not starting. Interest only you have to enter while interest expiry time. 

To record the long term loan the following entry is done:

Dr. bank a/c (current A/C)   Dr, interest expense ( for the current period) 

Cr. bank A/C (LTLoan) Cr. Interest Accrued

where interest Accrued  will be accounted for at the end of each year till the end of the period of the loan

At the time of recieving the loan into your account the entry will be:

Bank A/c                                 dr

Loan Processing Charges Dr.

To Bank Loan Account                  CR

 

As and wehen any installment paid the following entry needs to be passed:

Bank Loan A/c

Interest Expense

    To Bank Account

 

cash a/c dr

  To LOan A/c

Bieng  cash recieved cash account debited and loan account is credited

journal entry when receipt of long term loan Bank A/c. DR To Long term loan when due of interest Interest A/C DR To Party A/C (provider of long term loan ) when payment of interest Interest party A/C DR To Bank

Cash Or bank recorded on debit side and loan is posteed on creidt side.

As

cash/Bank

   To Loan

want to debit cash/bank a/c and credit loang term loan (liability) a/c

It would be better to maintain the Mirror account as reflected in the Books of the Banker. All  incidental charges, like processing, stamps other charges including regular  interest  are generally charged by the banker first to the Loan account and recovered from their current/cash credit or overdraft account. 

The reflections of all charges in the same account is more convenient to know the history of the  account in its very detail for any time reference. Better follow that practice. Better  maintain a mirror account to reflect the same transaction details as of the Banker.

cash    Dr

      Loan     Cr

cash/bank A/c

loan term loan {Liability} A/c

Debit to Cash in bank and a credit to Long Term Loan accounts, respectively.