Interest received, Repayments of loans granted, Repayments of loans received etc. – how are they reached? Considering that the period for which the statement is prepared is long and the company has various transactions going through its bank account, manually picking interest received may not be an option. But how should you do it then?

The logic is fairly simple and is similar to the one we already explained in the post How to reach those “paid” amounts on the statement of cash flows? Your beginning or brought forward balance is something you would expect to have received during the current period. In addition, you have current period income, which you’d again expect that part is already received during the period. So you simply add them up. To bring you an example:

- Brought forward interest receivable balance on the balance sheet: 50
- Interest income on the income statement for the reporting period: 200

So the total you would expect to have received during the reporting period is 250. Now obviously not all of this is an actual received amount and part of it you would have within the period end interest receivable account.

To continue with our example, let’s say that out of this 250 the unpaid amount is 60. This 60 is your period end interest receivable balance. Now to sum it up, the math looks like this:

Brought forward interest receivable 50 + interest income 200 – carried forward interest receivable 60 = received interest during the reporting period 190.

You add up the balances you expect to be received during the period and then take from it the not yet received balance to reach to an actual received amount.

With loan repayments the situation is not that easy in case you have also given / received loan, because the net change of the loan on the balance sheet is all you see as the loans are not recognized through income statement. But then again, considering there are not a lot of loans on your balance sheet, keeping a separate table to keep all the info of the dates, amounts, parties and transactions (i.e. “given”, “repaid”) helps you tremendously when preparing this part of the statement of cash flows.