Hello,
I am trying to record the journal entries for taking a loan
and refinancing it into two new loans. How would I show the
closing loan and the opening of two new loans?
Thank you for your help!
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Answer Posted / ankit
While Receiving Loan from Bank , Journal Entry Would be :
Bank Account Debit
Lender's Loan Account Credit
2. When Borrower is responsible for paying Interest on Loan
Interest Account Debit
Interest on Loan Payable Account Credit
3. When Borrower pays the interest to Lender
Interest on Loan Payable Account Debit
Bank Account Credit
4. When Borrower repays his loan.
(a) If there is no interest liability on loan.
Lender's Loan Account Debit
Bank Account Credit
(b) If there is any interest liability on loan
(i)
Interest on Loan Payable Account Debit
Lender's Loan Account Credit
(ii)
Lender's Loan Account Debit ( Principle + Payable Interest)
Bank Account Credit
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