In good banking practice the loan accounts should be proved frequently by determining the fact of agreement between the balances on the loan ledger and the balance of the loan account on the general ledger. The cards likewise should be proved with the general ledger.

A Loan Paid Transaction (1)

L. Byron pays his six months' loan of $600 with interest on June 30. The general ledger entries for the transaction are:

The change in the general ledger loan account caused by this entry is shown in the following illustration:

Auxiliary Record Entries

The card would be stamped "paid," the note indorsed and returned with the collateral, and the customer's receipt taken therefor; and the loan envelope would be stamped "completed" and filed with the paid loans. An entry would also be made in the maturity tickler for June 30, which would involve simply barring out the amount of Byron's note in the tickler and stating the fact of payment in the disposition column. These entries are so simple as to require no illustration, but there are two records, the entries of which are a bit more involved. These are the following:

1. Entry in the register or journal of loans paid.

It should be noted that the debits on this sheet equal the credits.

2. Entry in Loan Ledger showing loan paid.

This illustration shows both loans made and paid entries for Byron's loan.