Account Information

Financial Statement Income Statement
Normal Balance Debit

Definition

Interest paid on loans, credit facilities, and overdrafts.

Common Journal Entries

Record paid bank loan interest

Dr. Bank Interest Expense
Cr. Bank Account

Accrue bank interest expense

Dr. Bank Interest Expense
Cr. Loan Interest Payable

Record overdraft interest

Dr. Bank Interest Expense
Cr. Bank Overdraft

Transfer bank interest to income summary

Dr. Income Summary
Cr. Bank Interest Expense

Record paid bank loan interest

Dr. Bank Interest Expense
Cr. Bank Account

Accrue bank interest expense

Dr. Bank Interest Expense
Cr. Loan Interest Payable

Record overdraft interest

Dr. Bank Interest Expense
Cr. Bank Overdraft

Transfer bank interest to income summary

Dr. Income Summary
Cr. Bank Interest Expense

📐 IFRS vs US GAAP Accounting Treatment

IFRS IFRS 9 Financial Instruments
US GAAP ASC 470 Debt

❓ Frequently Asked Questions

Q: How are bank interest expenses recorded?

A: Dr. Bank Interest Expense, Cr. Bank or Accrued Interest on Loans.