Loan a/c dr. to cash a/c

interest on loan a/c dr
 to loan a/c

Dr.Loan a/c
Dr.Interest on loan a/c 
Cr.Bank a/c

if the Loan a/c is settled by paying cash then the 

entry: By Loan A/c
       To Cash A/c 

           Normally Higher Amounts will not be settled by 
paying cash, we pay through cheque/Demand drawft.

Entry: By Loan A/c
       To Bank A/c

J.V

LOAN A/C - DR
 TO CASH (OR)BANK