how will interest on bank overdraft be accounted in cfs if two years figures are given as follows:
| Particulars |
31st March, 2017
Rs.
|
31st March, 2006
Rs.
|
| Equity Share Capital 10% Debentures Securities Premium Reserve Bank Overdraft Interest of Bank Overdraft |
5,00,000 1,00,000 50,000 2,00,000 15,000 |
4,00,000 1,50,000 40,000 1,50,000 10,000 |
Dear Student
From this information we have to find the Interest paid in the current year and Interest charged to profit and loss account, this shall be done by preparing Interest account :
The opening balance of Interest account which was,nt charge to profit and loss account shall be charged to profit and loss account of current year and thr closing balance represents the amount of interest paid in current year.
The amount charge to profit and loss is added in operating activity whereas the amount paid is deducted in Financing activity.
Therefore Rs 10,000- shall be added in operating activity and Rs 15,000/- shall be deducted in Financing activity.
Regads
From this information we have to find the Interest paid in the current year and Interest charged to profit and loss account, this shall be done by preparing Interest account :
| Interest on Bank OD | |||||
| Cr. | |||||
| Date | Particulars | Amount | Date | Particulars | Amount |
| (Rs) | (Rs) | ||||
| Bal B/d | 10,000 | Profit and Loss A/c | 10,000 | ||
| Bank OD A/c | 15,000 | ||||
| Bal C/d | 15,000 | ||||
| 25,000 | 25,000 | ||||
The opening balance of Interest account which was,nt charge to profit and loss account shall be charged to profit and loss account of current year and thr closing balance represents the amount of interest paid in current year.
The amount charge to profit and loss is added in operating activity whereas the amount paid is deducted in Financing activity.
Therefore Rs 10,000- shall be added in operating activity and Rs 15,000/- shall be deducted in Financing activity.
Regads