Accounting For Payday Loans – Journal Entries For Payday Loan, Cash Advance & Interest Receivable With Provision For Bad Debts
Payday Loan is a type of cash advance offered to individuals or employees looking for emergency cash to finance short-term needs. It is a convenience way to raise cash as it comes with convenient terms like interest, repayment period etc.
Accounting Entries For PayDay Loan
When you advance a loan to customers, CR your bank account and DR payday loan receivable account with the amount disbursed as a loan. The interest income on the loan should also be accounted for, hence, DR payday loan receivable account and CRinterest income account with the interest portion of the loan.
On receipt of part or outright payment, DR your bank account and CR payday loan receivable account.
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