Morning all, I'm having a dumb moment and wondered what I am doing wrong.
I picked up a new client last year who is a self employed taxi driver. During last year they bought a taxi which I put through the books as such:
dr vehicles 14577.36
cr loan 14577.36
Throughout the year the payments were made up of total £5189.60 capital payment and £916.80 interest so I posted:
Debit loan 5189.60
Debit loan interest 916.80
Credit cash 6106.40
I now realise this is probably wrong as the interest paid is not reducing the balance on the loan account as it should be £8470.96. This is all last year 13/14 and I am now doing this years and realised my mistake. Does anyone have any suggestions how to rectify it. I need the loan account to balance with the statement from the loan company but surely I also need to account for the interest paid as an expense in the P&L or am I really being dumb!!
