When a company borrows money from banks or other financial institutions in its daily operations, it can repay it in installments within a certain period of time. When the company repays the loan in installments, it can set up a financial expense account for accounting. How to make relevant accounting entries?

Accounting entries of the company's installment loan repayment

1. When repaying bank loan interest, relevant accounting entries are compiled as follows:

Borrow: financial expenses-loan interest

Loans: bank deposits

2. When the principal of the bank loan is repaid at maturity, the relevant accounting entries are compiled as follows:

Borrow: short-term loan/long-term loan.

Loans: bank deposits

Note: Loans over one year are long-term loans.

What are the financial expenses?

Financial expenses refer to the financing expenses incurred by enterprises to raise the funds needed for production and operation, including interest expenses (minus interest income), exchange gains and losses and related handling fees, discount interest on commercial bills, cash discounts incurred or received by enterprises, etc.

Interest expense refers to the net amount of interest expense (except capitalized interest) such as short-term loan interest, long-term loan interest, bill payable interest, bill discount interest, bond payable interest and long-term interest payable of imported equipment minus bank deposit interest income.

Exchange loss refers to the difference between the bank's buying price and selling price and the exchange rate used for bookkeeping due to the settlement or purchase of foreign exchange from the bank, and the difference between the foreign currency ending balance converted into RMB and the original RMB at the end of each month (quarter, year).

Relevant handling fees refer to the handling fees paid for issuing bonds (except capitalization), the handling fees of issuing banks, and the handling fees for adjusting foreign exchange. , but does not include the handling fee paid for issuing shares.