Lending money on interest

How do we enter in Manager or keep an account of money lended on interest to someone…???

TIA :slight_smile:

Assuming this is a loan to a 3rd party,

You need to create a Balance Sheet asset account to register the amount loaned, interest charges and repayments. The balance on this account will be the amount you are owed

Then make a payment from a bank or cash account to the Loan Account to represent the amount loaned

When interest is due, you use a journal entry to credit a Interest Received account and debit the loan account

When a loan payment is received, you Receive it to your bank/cash account and post it to the Loan Account

Alternatively, when the repayment is received you could split it in interest paid and loan repayment and ignore the journal entry. This will slightly distort the position if the repayments are late or missed as you will not record the interest due

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Thanks Joe…Will try this and get back in case :slight_smile:

Dear @pranay in simple mothed just create a Group name with Loan to members under Assets and Interest on Loan to members under Income Group.

Whenever disburse the amount to your members.create a payment entry from your cash or bank account and at the same time whenever received money from your members as a daily, weekly and monthly installment payment, create a receipt entry to your cash or bank account, this will separate the principal amount as well interest amount.

This method will avoid the Journal entry posting.