You can calculate interest on each invoice for the period it is outstanding, wholly or partly. Transaction by transaction or bill-by-bill interest calculation is permitted for party accounts like accounts under the groups sundry debtors and sundry creditors. For interest calculation on each bill, Bill-wise details should be enabled for the company and the party.
The Ledger Interest report displays the interest calculated for the ledger selected. If a part of the amount is settled, then interest is calculated only on the amount pending to be repaid.
1. Go to Gateway of Tally > Display > Statements of Accounts > Interest Calculations > Ledger .
2. Select the required ledger. The Ledger Interest report appears as shown below:
3. Click F1 : Detailed to view the calculation and period.
Note: In case if part of the amount is settled, the interest is calculated on the remaining balance.
Now check the interest amount due.
Note: The Cr in the interest amount indicates that it is a liability.
The interest liability and expense can be accounted by recording a journal entry. Interest can also be recorded using debit notes and credit notes with voucher class.