Time deposit transactions are simple. Assume that a firm leaves $15,000 with the bank under time deposit arrangement and that the bank agrees to pay interest on it at 3%, crediting interest every thirty days. The entries covering the original deposit are:

Debit: Cash (11)..................

(assuming cash was received)


Credit: Time Deposits (43)......


An auxiliary time deposit ledger page would be set up for the depositor showing in the credit and balance columns the amount of the deposit together, of course, with date of deposit. These ledgers are of simple form, usually with date, description, debit, credit, and balance columns. On the date interest is credited to the account the entries would be as follows:

Debit: Interest Paid on Deposits (23) Credit: Time Deposits (43)

Withdrawal of time deposits requires thirty days notice. A withdrawal entry will be just the reverse of the first of the foregoing entries. The balance of the time deposits ledger must, of course, always agree with the control account.