Interest Calculation in Tally.ERP 9

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Mapping

From Gateway of Tally navigate to Features Screen by pressing F11 on the keyboard.

Action to perform

In the company feature screen enable the option activate interest calculation by typing ‘Yes’ and to set maintain bill-wise details: to Yes . It is important to set Use advanced parameters to No for Simple interest calculation.    

Brief

Explanation

Step 1

Create Party Ledger

Two possibilities: We have to create a customer ledger with interest activated or we can edit existing ledger for activating interest calculation for that particular party.

Mapping : Gateway of Tally > Accounts Information >  Ledger > Alter/Create

Action to perform: In the ledger creation/Alteration screen set the following option :

·       Default credit period: 30 days (as given in the example of 30 days credit)

·       Activate Interest calculation: Yes and press Enter Key.

Setting Interest rates parameters:

·       Set calculate Interest Transaction by transaction to: Yes, This option will calculate interest on each transaction.

·       Override parameters for each transaction: activating this option will help you to change the following parameters while passing entries in voucher books.

· Rate: Enter the rate as decided here 20%

·       Per.  : Here four interest style is given 1) 30 Days Month 2) 365 Day Year 3) Calendar Month 4) Calendar Year. Select 365 Day Year.

Step 2

F8: Sales Voucher Entry

·       From Gateway of Tally.ERP  9  navigate to Accounting Voucher Screen by pressing V on the keyboard

·       Now press F8 to pass a Sales Voucher

·       Under party ledger Name select XYZ Ltd and enter bill details and press enter.

·       Now we will see interest parameters screen. This parameter appears because we have chosen override interest parameters while activating interest for the ledger.

·       Press enter and save the sales voucher.

Step 3

Generating Interest calculation report

In the given example, the credit period set is 60 days which ends on 31.05.2018. The amount to be paid by XYZ company is overdue by 60 days. As agreed the party due an interest of 20% p.a., to the total number of over due days. To know the total interest go to :

Mapping : Gateway of Tally>Display>Statement of Account > Interest Calculations>Interest Receivable.

And to view the Interest calculation report do the following :

·       Choose the period by clicking Period button or “F2” from Keyboard. 01-06-2018 to 31-07-2018

·       Interest calculation summary screen will appear now for the given period blocked

·       Press enter to drill down until voucher level

Step 4

Passing Interest receivable entry

·       Gateway of Tally  >  Accounting Voucher  >  Click “F – 7” for Journal

·       Create Interest account under Indirect Incomes

·       Now Debit XYZ Ltd with the amount generated by Interest calculation summary screen and account interest in books by crediting Interest Account.