How to show loan interest accrue
Hi,
I have a Liability account for bank loan that accrues interest montly. I'm not sure how to record the interest charges as they are just changing the total owing on the loan, they are not being deducted from an account. Can anyone help. Thanks. Also, is there GST on the interest?
Hi haleyg84
Thanks for your post. Generally speaking, you can record a General Journal with a credit to the loan account and a debit to a expense account eg Loan interest. This will increase the loan account and allow you to track the interest paid.
I do recommend you check with your accountant if you're not sure about the correct setup or tax codes for your loan.
Please don't hesitate to post again if you have further questions.
