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Managing Qtr end/Yr end accounting entries in Qtrly/Half yrly compunding Fixed Deposits

rohankamat1985
Participant
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Dear Friends,

I have a query on how to post and manage the quarter end interest and Tax entries for a Quarterly compounding FDs.

I will explain with an example:-

FD start date- 22 Aug 2014

FD end date- 22 Aug 2015

Quarterly compounding FD.

I have used derived flows for Tax from Interest capitalization entries.

Flows will be on following date:-

22.08.2014     Investment

22.11.2014     Interest cap

                       Tax

22.02.2015     Interest cap

                       Tax

22.05.2015     Interest cap

                       Tax

22.08.2015     Interest cap

                       Tax

                       Final  repayment

The accounting entries are as follows:-

1) For interest capitalization

Investment account   Dr.

Interest on FD           Cr.

2) For Tax,

Tax receivable           Dr.

Investment account   Cr.

Here, Tax is always reduced from the quarterly compounding interest for further compounding effect.

Now My question is, how can we post the Tax on 31st march 2015. This tax will be calculated for the accrued interest from 22nd Feb 2015 to 31st March 2015.

It has to be considered as banks issue Tax certificate as on 31st march.

If we add an extra Tax entry on 31st march 2015, it will affect the entire final calculation of the maturity amount, As we are going to calculate the tax on 22.05.2015 which already includes the period 22nd Feb 2015 to March 2015

How is this case handled in SAP?

P.S.

Accounting entries for monthly Accrual of interest

Interest Accrued on FD  Dr.

Interest on FD                Cr.

Regards,

Rohan

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Answers (1)

Answers (1)

rohankamat1985
Participant
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Hi Friends,

Can anyone throw some light on this?

Regards,

Rohan