Hi,
Continuation for the above requirement.
Interest on all govt sec is payable half yearly, and dates are fixed. Therefore, system should extract the date of interest payment and compute the upfront interest payable on purchase itself. It should compute interest on the interest payment date and year end as well and reverse the same accordingly.
Journal Entries will be passed as per the below requirement
On the value date, Purchase is recorded by passing the following entry:
Gov Sec DR (Face Value)
Interest Receivable DR (If ***-interest)
Expenses Account DR (Brokerage/ commission/ charges)
Bank Account CR
When Interest is received:
Bank Account DR
Interest receivable CR (if provided at the time of purchase)
Interest on govt sec CR
On sale
Provision of interest income from last interest payment date to the date of sale should be first made and then reversed through the following entry:
Bank Account DR
Gov Sec CR
Interest receivable CR