Journal entries Updated November 2026

Interest income journal entry

Debit Cash and credit Interest Income for the interest the bank credited on the statement. If interest has been earned but not yet received at month-end, accrue it with Dr Interest Receivable / Cr Interest Income, then reverse into Cash when it arrives.

Syntax

Received: Dr Cash [interest] / Cr Interest Income [interest]. Accrued: Dr Interest Receivable / Cr Interest Income

Part	What it is
`Cash`	Debit when the bank credits the interest
`Interest Income`	Credit; other income on the income statement
`Interest Receivable`	Debit for interest earned but not yet paid at period end

Examples

Statement shows interest credited 18

Result: Dr Cash 18 / Cr Interest Income 18

A 10,000 note at 6% held for one month; interest not yet received at month-end

Result: Accrue 10,000 x 6% x 1/12 = 50: Dr Interest Receivable 50 / Cr Interest Income 50

The 50 is received the next month

Result: Dr Cash 50 / Cr Interest Receivable 50

Common mistakes

Crediting Cash and debiting Interest Income: that would reduce cash; interest received increases it.
Recording accrued interest again when received: the receipt clears the receivable, not income.
Netting interest against bank fees: post them to separate accounts.

Practice Interest income journal entry

These drills check your answer on live data, free, no account needed.

Recording fees and interestClassify every line, enter both adjusted balances, then choose the journal entry the company must record for each item that affects its books.
Interest earnedClassify every line on the bank statement and in the cash book, then enter the adjusted bank and book balances.

Questions

Is interest income a credit?

Yes. Income accounts increase with credits. The matching debit goes to Cash or Interest Receivable.

Is interest income operating revenue?

For most businesses it is other income, shown below operating profit. For a bank or lender it is core revenue.

Interest earnedInterest the bank credits appears on the statement first. Add it to the book balance in the reconciliation and post Dr Cash / Cr Interest Income.
Bank reconciliation journal entriesThe journal entries that follow a bank reconciliation, one per book-side item: service charges, interest, NSF checks, notes collected, book errors.
Accruals at month-endHow to accrue expenses incurred but not yet billed and revenue earned but not yet invoiced at month-end, with worked entries and the reversal next month.