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What is the journal entry for closing a bank loan early?

when i take the loan passed journal as:

bank ac dr343875

charges dr6125

prepaid interest dr86752

bank loan cr436752

 

i made monthly entry for loan installment as:

loanac dr12132

casha/c cr12132

loan ineterst a/c dr2437

prepaid ineterest cr2437

 

now there is a balance of303300. i settled this loan for265000.

please tell me how to pass this cloasing entry to settle this entry

 

 

 

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Question added by Muhammad Rashid , Accounts payable , Wafi Property LLC
Date Posted: 2015/05/17
Muhammad Rashid
by Muhammad Rashid , Accounts payable , Wafi Property LLC

Thankyou sajeesh...the decision on balance prepaid interest upon us..right??

SAGEESH  KR
by SAGEESH KR , SENIOR ACCOUNTANT , Middle East Insulation Co. LLC

Closing entry for this  Loan will be

Loan A/c                   Dr      303300  

Bank A/c                   Cr                        265000

Prepaid Interest      Cr                          38300

 

Need to close Prepaid interest A/c also. there will be a balance of59945 in Prepaid interest after deducting38300, there will be21645/- balance.

If company in profit we can settle this amont as interest expense in one time or other wise we can deduct monthly wise by the same way previousely done.

One time settlement of prepaid interest

Loan interest                    DR          21645

Prepaid Interest               CR                          21645

 

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