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Interest charged on overdue account

This topic has 1 reply, 2 voices, and was last updated 1 year ago by John Moffat.

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December 27, 2021 at 2:00 pm #644907
shrew123
Member
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Hello guys, I have some questions
1) What is an “interest charged on overdue account” => Can you provide me a definition, how it works..? Whatever as long as I can understand it
2) Why “interest charged on overdue account” should be debited in the receivable control account? => to answer the 2nd question, I think the key is we have to answer question 1 because when I comprehend it clearly, I can understand the way it functions
December 28, 2021 at 9:36 am #644944
John Moffat
Keymaster
- Topics: 56
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If we sell goods on credit to a customer saying that the amount is payable in (say) one month, then if the customer has not paid in one month (and so the amount is overdue) we might charge interest on the amount owing.
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