UNIQUE COMPUTER CLASSES

TALLYPRIME

CHAPTER: INTEREST CALCULATION

Practical Accounting Chapter | Student Learning Material

This chapter has been newly structured for TallyPrime while using the uploaded ERP 9 chapter only as a
reference for its practical teaching sequence—setup, ledger configuration, transaction entry, interest report,
voucher class, booking of interest, and receipt.

1. INTRODUCTION
What is Interest Calculation?

Interest is an additional amount charged on money that remains unpaid for a specified period.

In business, goods are often sold to customers on credit. If a customer does not make payment within the
agreed time, the business may charge interest on the outstanding amount.

Example:
A business sells goods worth ₹1,00,000 on credit. If the customer delays the payment, the business may
charge interest at 18% per annum for the period for which the amount remains outstanding.

TallyPrime can calculate interest automatically based on the interest parameters configured in the party
ledger. The official TallyPrime guidance also supports interest calculation on outstanding balances and
transaction-by-transaction calculation for party accounts.

In this chapter, we will learn how to:

 Enable Interest Calculation in TallyPrime.

 Create a stock item with Opening Stock.
 Create customer ledgers and activate interest calculation.
 Record Credit Sales of goods.
 View Interest Calculation Reports.
 Create a Debit Note Voucher Class for interest accounting.
 Record Interest Receivable through Debit Note.
 Receive the original invoice amount along with interest.
 Verify the calculations manually.

2. ENABLE INTEREST CALCULATION

Before calculating interest, the Interest Calculation feature must be activated.

Steps
Gateway of Tally → Press F11 (Features) → Accounting

Set:

Option Setting
Activate Interest Calculation Yes

Press Ctrl+A to save the configuration.

Purpose

This feature allows TallyPrime to calculate interest automatically according to the rate and conditions
specified in a ledger. Interest parameters are configured in the ledger master after the feature is activated.

3. CREATE STOCK ITEM WITH OPENING

STOCK
For this chapter, we will use Laptop as our stock item.

Stock Item Details

Particular Details
Name Laptop
Under Primary
Units Nos.
Opening Quantity 20 Nos.
Rate ₹40,000 per Laptop
Opening Value ₹8,00,000

4. CREATE REQUIRED LEDGERS

We will create the following party ledgers:

Ledger Name Group

Mohan Traders Sundry Debtors
Ramesh Enterprises Sundry Debtors
Krishna Computers Sundry Debtors
Sales A/c Sales Accounts
Interest Received Indirect Incomes
Cash Already Created

Note: GST is not included in this chapter because our main purpose is to understand the Interest Calculation
feature.
4.1 Interest Settings for Party Ledgers
Create each customer ledger under Sundry Debtors.

Use the following interest settings for all three parties:

Interest Parameter Setting

Activate Interest Calculation Yes
Calculate Interest Transaction-by-Transaction Yes
Rate 18%
Interest Style 30-Days
Applicability From transaction date

For party accounts, transaction-by-transaction interest can be configured through the ledger's Interest
Parameters, allowing interest to be calculated bill-wise or transaction-wise.

5. PRACTICAL TRANSACTION SET – 1

Mohan Traders
Business Transaction

Date: 01-01-2026

Sold 2 Laptops to Mohan Traders on credit at ₹50,000 per Laptop.

Payment is received on 31-01-2026, after an outstanding period of 30 days.

Calculation of Sales Value

Particular Details
Quantity 2 Nos.
Rate ₹50,000
Total Sales Amount ₹1,00,000

5.2 Check Interest Calculation Report

Change the report period up to 31-01-2026.

Navigation

Gateway of Tally → Display More Reports → Statements of Accounts → Interest Calculations

Open the relevant Interest Receivable or Ledger report and select:

Mohan Traders
The interest report shows the calculated interest based on the configured rate, outstanding amount, and
applicable period. Tally's current help describes viewing accumulated interest for ledgers enabled for interest
calculation.

Interest Calculation

Principal Amount: ₹1,00,000

Rate: 18% p.a.
Period: 30 Days

Formula:

Interest = Principal × Rate × Days ÷ 36500

Interest = ₹1,00,000 × 18 × 30 ÷ 36500

Interest = ₹1,479.45

6. CREATE DEBIT NOTE VOUCHER CLASS

The calculated interest shown in the report is not automatically treated as an accounting transaction. To add
the interest to the customer's account, the interest amount must be booked in the accounts.

A Debit Note Voucher Class can be configured for interest accounting. The reference chapter follows the
same overall teaching sequence: calculate interest, configure a voucher class, and then bring the interest
amount into the books.

Steps
1. Go to Gateway of Tally.
2. Select Alter.
3. Select Voucher Type.
4. Select Debit Note.
5. Go to the Name of Class field.
6. Enter:

Interest Calculation

7. Open the Voucher Class configuration.

8. Enable the option for using the class for Interest Accounting.
9. Complete the configuration.
10. Press Ctrl+A to save.

The interest-accounting workflow uses voucher classes so calculated interest can be brought into the books
through the relevant note voucher.
7. RECORD DEBIT NOTE FOR MOHAN
TRADERS
Date: 31-01-2026

Interest calculated for Mohan Traders is:

₹1,479.45

Record a Debit Note to add the interest to the customer's account.

Accounting Entry

Mohan Traders A/c Dr. ₹1,479.45

To Interest Received A/c ₹1,479.45

Voucher Entry

Open the Debit Note Voucher, select the Interest Calculation class, and record the interest amount.

After saving the voucher, Mohan Traders' total outstanding becomes:

₹1,00,000 + ₹1,479.45

Total Outstanding

₹1,01,479.45

8. RECEIVE PAYMENT FROM MOHAN

TRADERS
Date: 31-01-2026

Mohan Traders pays the complete outstanding amount along with interest in cash.

Receipt Voucher

Gateway of Tally → Vouchers → F6: Receipt

Enter:

Field Details
Date 31-01-2026
Account Cash
Particulars Mohan Traders
Amount ₹1,01,479.45
9. PRACTICAL TRANSACTION SET – 2
Ramesh Enterprises
Business Transaction

Date: 01-02-2026

Sold 3 Laptops to Ramesh Enterprises on credit at ₹50,000 per Laptop.

The complete payment is received on 18-03-2026.

Outstanding Period: 45 Days

9.1 Sales Calculation

Particular Details
Quantity 3 Nos.
Rate ₹50,000
Sales Amount ₹1,50,000

Sales Entry

Ramesh Enterprises A/c Dr. ₹1,50,000

To Sales A/c ₹1,50,000

9.2 Interest Calculation

Principal = ₹1,50,000
Rate = 18% p.a.
Period = 45 Days

Interest = ₹1,50,000 × 18 × 45 ÷ 36500

Interest = ₹3,328.77

Check Report

Set the report date up to 18-03-2026 and open:

Display More Reports → Statements of Accounts → Interest Calculations → Ramesh Enterprises

Check the calculated interest amount.

9.3 Debit Note Entry

Date: 18-03-2026

Ramesh Enterprises A/c Dr. ₹3,328.77

To Interest Received A/c ₹3,328.77

Total Amount Due

₹1,50,000 + ₹3,328.77

Total = ₹1,53,328.77

9.4 Receipt Entry

Date: 18-03-2026

Field Details
Account Cash
Particulars Ramesh Enterprises
Amount ₹1,53,328.77

10. PRACTICAL TRANSACTION SET – 3

Krishna Computers
Business Transaction

Date: 01-04-2026

Sold 2 Laptops to Krishna Computers on credit at ₹60,000 per Laptop.

The complete payment is received on 31-05-2026.

Outstanding Period: 60 Days

10.1 Sales Calculation

Particular Details
Quantity 2 Nos.
Rate ₹60,000
Sales Amount ₹1,20,000

10.2 Check Interest Report

Set the report date up to 31-05-2026.
Open:

Gateway of Tally → Display More Reports → Statements of Accounts → Interest Calculations

Select:

Krishna Computers

Interest Calculation

Principal = ₹1,20,000
Rate = 18%
Period = 60 Days

Interest = ₹1,20,000 × 18 × 60 ÷ 36500

Interest = ₹3,550.68

10.3 Debit Note Entry

Date: 31-05-2026

Krishna Computers A/c Dr. ₹3,550.68

To Interest Received A/c ₹3,550.68

Total Amount Due

₹1,20,000 + ₹3,550.68

Total = ₹1,23,550.68

10.4 Receipt Entry

Date: 31-05-2026

Field Details
Account Cash
Particulars Krishna Computers
Amount ₹1,23,550.68

Accounting Entry

Cash A/c Dr. ₹1,23,550.68

To Krishna Computers A/c ₹1,23,550.68