Example: Simple Interest on a Security Deposit

For the security deposit, a tenant is entitled to earn annual interest on a monthly basis. The interest is simple (noncompounding); and the rate varies, according to the prime rate. Although the lease begins on June 1, 2008, the interest calculation begins two months later on August 1. The interest is based on the general ledger date of the receipt for the security deposit, and the bill code INTR (interest) is used to record the interest.

You use the R15160 processing options to specify the interest rate because it is variable. The Rate Indc field identifies this rate. The Retr Code field is blank. This code is optional because no grace period exists.

The bill code, plus the prefixes RC and PM, comprise the related AAIs RCINTR and PMINTR.