To calculate Interest in the Simple Mode:
Go to Gateway of Tally> F11: Features> Accounting Features > Set Activate Interest Calculation to Yes. > Set Use Advanced Parameters to No.
In the Ledger Creation screen set Activate Interest Calculation to Yes.
The Interest Parameters sub screen is displayed. Enter the Rate and select the interest style from the list.
Interest calculations on outstanding balances
Enter Interest details in Vouchers (only in case of transaction by transaction/Bill-by-bill) and view Interest reports.
You will have to alter existing ledger accounts to permit interest calculations on them. The same operation will apply when creating a new ledger account.
Interest calculation on outstanding balances is allowed for any ledger account. You simply specify the interest rate and style of calculation. Nothing is required to be done for interest during voucher entry.
Let's take an example: Interest calculated on Outstanding Balances.
Go to Gateway of Tally> Accounts Info.> Ledgers> Alter (Single)> XY Bank (bank account)
Set Activate interest Calculation to Yes.
On activation, the Interest Parameters must be set. It is the basis on which interest will be calculated for this Ledger account.
Rate: This is the rate at which the interest has to be calculated. In this case, specify 15%.
Interest Style: It is the basis on which the rate is applied. Of the four options, select 365-Day Year.
Accept the screen.
You can now view the amount of interest that could be charged by the Bank.
Report on Interest Calculated on outstanding balances
The Interest Calculations Report can be displayed and printed.
Go to Gateway of Tally> Display> Statements of Accounts> Interest Calculations> Ledger> XY Bank (Bank Account)
Interest calculation transaction by transaction
Activate and specify interest calculations in ledger masters.
Transaction by transaction or Bill-by-Bill interest calculation is permitted for 'Party' accounts like accounts falling under the groups Sundry Debtors and Sundry Creditors. For example:
Alter a Customer account (under the group Sundry Debtors or one of its sub-groups).
Set Activate Interest Calculation to Yes. In the Interest Parameters now you have three lines to answer.
Set Calculate Interest Transaction-by-transaction to Yes.
Set Over-ride Parameters for each transaction to No.
If set to No, you are not allowed to change interest parameters in voucher/invoice entry. If set to Yes, you can change the interest parameters during entry.
Report on Interest Calculated on outstanding transactions/bills
To view the Interest calculated
Go to Gateway of Tally> Display> Statements of Accounts> Interest Calculations> Ledger> CP Ltd
The report is similar to the Bill-wise Outstanding Statement. The last column gives the interest amount on the transaction. Select the line to be viewed in detail for its calculations.