Interest on Investment:

Interest receivable on investments is an income for the business.

Example: The Trial Balance (31.03.04) shows the following:

Investments @10%                                            Rs. 5,00,000

Interest received on investments                  Rs.    40,000

Adjustment:

Provide for accrued interest on investments Rs.10,000.

Adjusting Entry

Date	Particulars	L.F	Rs.	Rs.
2004
31-Mar	Accrued interest on investments A/c                                                                                                  Dr		10,000
	To Interest received A/c			10,000
	(Accrued interest on investments provided)

 

Accrued interest on investments (outstanding interest receivable) will be shown

i) On the credit side of the Profit and Loss account by way of addition to the appropriate interest account and

ii) On the assets side of the balance sheet by way of addition to the investments account.

Profit and loss account for
the period year 31st March, 2004
Dr.                                                                                                                                                                                                                                                  Cr.

Particulars	Rs.	Rs.	Particulars	Rs.	Rs.
			By Interest received	40,000
			Add: Accrued interest	10,000
					50,000

 

Balance Sheet as on 31st March, 2004

Liabilities	Rs.	Rs.	Assets	Rs.	Rs.
			Investments	5,00,00
			Add: Accrued Interest	10,000
					5,10,000