India debit credit regarding due payments

[joy]

hi, i am solving an exercise on journal, and i have come across a transaction as"interest, Rs600, due but not paid on a loan taken by the firm".

my journal entry is"Interest payment A/c Dr. to Loan A/c Rs.600"
cause my understanding is since the firm has an obligation to pay Rs. 600 to the loan therefore, Loan A/c is Credited and Interest payment A/c is debited.

is my understanding correct?please help!

 

[Triest123]

hi, i am solving an exercise on journal, and i have come across a transaction as"interest, Rs600, due but not paid on a loan taken by the firm".

my journal entry is"Interest payment A/c Dr. to Loan A/c Rs.600"
cause my understanding is since the firm has an obligation to pay Rs. 600 to the loan therefore, Loan A/c is Credited and Interest payment A/c is debited.

is my understanding correct?please help!

Loan amount should be stated at its amortised costs (i.e. excluding any unpaid interest)
unless you have signed a new loan agreement for the debt restructuring with your lender
(i.e. combine the unpaid interest with the existing loan to form a "new loan" where the
interest rate might be adjusted.

So the accounting entry is
Dr Interest (expense) on Loan Rs600
Cr Interest Payable Rs600
To record the unpaid interest for the loan