How to calculate interest on Outstanding balance using Simple Mode of interest calcuation, where Advanced Parameters are Not Applicable?
View the Interest reports.
Interest calculations on Outstanding Balances
Activate and specify the interest calculated in the Ledger Masters
You will have to alter the existing ledger accounts to permit interest calculations on them. The same operation applies even while creating a new ledger account.
The interest calculated on outstanding balances can be allowed for any ledger account. Specify the interest rate and style of calculation. Nothing is required to be done for the interest during voucher entry.
You might want to activate this on a Bank Account.
1. Alter a bank account e.g. Bank Ltd.
2. Tab down (or press <ENTER>) to place the cursor on the option Activate Interest Calculation? and set it to Yes.
Now you have to set the Interest Parameters – the basis on which the interest will be calculated for this ledger account.
Only two areas of information have to be given:
Rate – Specify a rate say 15%
Style –This is the basis on which the rate is applied.
There are 4 options:
Select the one applicable to you. According to this example, select 365-day Year.
3. Accept the screen.
You are now ready to view the amount of interest that could be charged by the bank.
Report on the Interest Calculated on Outstanding Balances
The Interest Calculations Report can be displayed and printed through the Display option in Gateway of Tally.
Display-->Statements of Accounts -->Interest Calculations -->Ledger -->Bank Ltd.
Note that the interest is calculated with respect to each change in balance figures. (A report has been added under the Advanced Parameters section below).
Interest calculation: Transaction by Transaction
Transaction by transaction or bill-by-bill interest calculations are permitted for 'Party' accounts like accounts falling under the groups Sundry Debtors and Sundry Creditors.
Take an example to explain this feature:
1. Alter a customer account, e.g. ABC Ltd (under the group Sundry Debtors or one of its sub-groups)
2. Set the option 'Activate Interest Calculation? to 'Yes'.
The Interest Parameters now have three lines to answer.
3. Calculate Interest Transaction-by-transaction - Set it to Yes
4. Over-ride Parameters for each transaction - Set it to No. If set to No, you will not be allowed to change interest parameters in voucher/invoice entry. However, f set to Yes, you can change the interest parameters during entry.
Report on the Interest Calculated on Outstanding Transactions/Bills
Display-->Statements of Accounts -->Interest Calculations -->Ledger -->ABC Ltd.
The report is similar to the Bill-wise Outstanding Statement. The last column gives the interest amount on the transaction. Press 'Detailed' to view the calculation. (A report has been added under the Advanced Parameters section ).
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