Journal Entry for Loan Taken (original) (raw)
Last Updated : 17 Apr, 2026
A business can take any amount of money as a loan from a bank or outsiders. In return, the business has to pay amount as interest.
**A. Loan is taken from a bank or person:
**Journal Entry:
**Example: ₹10,000 was taken as a loan from the bank.
**Solution:
**B. Interest charged by the bank or person and then paid:
There can be a situation where the interest is charged first and then paid. There will be two Journal Entries in this case.
**i. Journal Entry: (On charging of interest)
**Example: Bank charged interest of ₹500 on loan taken.
**Solution:
**ii. Journal Entry: (On payment of interest)
**Example: Interest due ₹500 on loan taken is paid.
**Solution:
Or
**C. Interest paid to bank/person on the loan:
In this case, only a single entry is passed because interest is directly paid.
**Journal Entry:
**Example: Interest of ₹500 has been paid to the bank on the loan taken.
**Solution:
