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Question

You pay Rs 54,000, via cheque as an installment of the Rs 8,00,000 loan acquired from bank. Of this amount, Rs 50,000 is applied to the principal, and Rs 4,000 is applied to the loan interest. Which of the following is correct?



A

Cash account & Interest account shall be debited

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B

Bank account & Loan account shall be debited

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C

Loan account & Interest account shall be debited

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D

None of the above

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Solution

The correct option is D

Loan account & Interest account shall be debited


The correct entry shall be:
Loan A/c Dr Rs 50,000
Interest A/c Dr Rs 4,000
        To Bank A/c Rs 54,000


Accountancy

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