Calculate interest on line of Credit interest onlyOnly calculate interest on the credit line.
To calculate line of credit payment
When you run a company, a credit line can be a useful way to cover short-term credit needs. One line of credit works similar to a credit line by lending only what you need and not until you need the money. Creditors have different guidelines for determining payments, but most use the weighted daily cost of sales methodology to calculate financing costs.
The calculation of credit line payment is therefore a simple job. Credit line is a credit line based on a credit agreement. Just like a credit or debit slip it has a credit or debit line defined by the creditor. Instead, you lend only when you make a purchase, and you can use the bank balance for any use.
This makes a credit line a good option for short-term credit. Creditors determine the amount of the loan on the basis of interest rates, residual amounts and the duration of the credit line. Interest on credit line repayments is generally charged using the weighted averaging method. During a payroll accounting cycle, the borrower calculates the mean value of the balances and calculates interest corresponding to a portion of the interest per annum charged on the basis of the number of working days in the payroll accounting cycle.
Compute the interest percentages for the payroll accounting periods, known as the accrual periods. Dividing the yearly interest by 365 and multiplying it by the number of workingdays in the accounting area. If, for example, the interest is 7.3 per cent per annum and 30 workingdays lie within the payroll accounting horizon, you have 7.
3% split by 365 and then multiply by 30 so that the interest is 0.6%. Multipolate the amount of each sale made during the accounting cycle by the number of remaining trading day(s) in the cycle in which the sale was made. Split this amount by the number of working day in the accounting area.
Assume you have made two buys for $100 each, one with 20 day left and one with 10 day left. You' ve split $100 20 ways by 30 and $100 10 ways by 30. The sum of these values corresponds to an avarage day's credit for new acquisitions of $100. To determine the credit line day to day ratio, sum the mean purchase balances from point 2 against the bank at the beginning of the settlement time.
When the opening $1,000 account balances and the mean $100 account balances of new buys, the mean $1,100 day balances are used. Multipolate the interest percentages for the payroll periods from activity 1 with the day's mean daybilance. When the interest is 0.6 per cent and the mean day is $1,100, the interest is $6.60.
Summarize this amount to the closing account and deduct your disbursement to determine the opening account for the next payroll run.