Loan asset account – processing the final repayment and loan closure

When the final repayment is received, verifying the repayment will result in a zero loan balance. If the amount received is more than the balance due on the loan, the remainder will be automatically allocated to interest.

You may need to enter journals to transfer any surplus or part of surplus allocated to interest to expense accounts if part of the final payment was reimbursement of legal, agency and other costs associated with finalising the loan.