diff --git a/erpnext/loan_management/doctype/loan/test_loan.py b/erpnext/loan_management/doctype/loan/test_loan.py
index 5a4a19a..7b65365 100644
--- a/erpnext/loan_management/doctype/loan/test_loan.py
+++ b/erpnext/loan_management/doctype/loan/test_loan.py
@@ -14,7 +14,7 @@
 	process_loan_interest_accrual_for_term_loans)
 from erpnext.loan_management.doctype.loan_interest_accrual.loan_interest_accrual import days_in_year
 from erpnext.loan_management.doctype.process_loan_security_shortfall.process_loan_security_shortfall import create_process_loan_security_shortfall
-from erpnext.loan_management.doctype.loan.loan import unpledge_security
+from erpnext.loan_management.doctype.loan.loan import unpledge_security, request_loan_closure
 from erpnext.loan_management.doctype.loan_security_unpledge.loan_security_unpledge import get_pledged_security_qty
 from erpnext.loan_management.doctype.loan_application.loan_application import create_pledge
 from erpnext.loan_management.doctype.loan_disbursement.loan_disbursement import get_disbursal_amount
@@ -132,7 +132,7 @@
 		loan_application = create_loan_application('_Test Company', self.applicant2, 'Demand Loan', pledge)
 		create_pledge(loan_application)
 
-		loan = create_demand_loan(self.applicant2, "Demand Loan", loan_application, posting_date=get_first_day(nowdate()))
+		loan = create_demand_loan(self.applicant2, "Demand Loan", loan_application, posting_date='2019-10-01')
 		loan.submit()
 
 		self.assertEquals(loan.loan_amount, 1000000)
@@ -149,23 +149,23 @@
 
 		process_loan_interest_accrual_for_demand_loans(posting_date = last_date)
 
-		repayment_entry = create_repayment_entry(loan.name, self.applicant2, add_days(last_date, 10), "Regular Payment", 111118.68)
+		repayment_entry = create_repayment_entry(loan.name, self.applicant2, add_days(last_date, 10), 111118.68)
 		repayment_entry.save()
 		repayment_entry.submit()
 
 		penalty_amount = (accrued_interest_amount * 4 * 25) / (100 * days_in_year(get_datetime(first_date).year))
 		self.assertEquals(flt(repayment_entry.penalty_amount, 2), flt(penalty_amount, 2))
 
-		amounts = frappe.db.get_value('Loan Interest Accrual', {'loan': loan.name}, ['paid_interest_amount',
-			'paid_principal_amount'])
+		amounts = frappe.db.get_all('Loan Interest Accrual', {'loan': loan.name}, ['paid_interest_amount'])
 
 		loan.load_from_db()
 
-		self.assertEquals(amounts[0], repayment_entry.interest_payable)
+		total_interest_paid = amounts[0]['paid_interest_amount'] + amounts[1]['paid_interest_amount']
+		self.assertEquals(amounts[1]['paid_interest_amount'], repayment_entry.interest_payable)
 		self.assertEquals(flt(loan.total_principal_paid, 2), flt(repayment_entry.amount_paid -
-			 penalty_amount - amounts[0], 2))
+			 penalty_amount - total_interest_paid, 2))
 
-	def test_loan_closure_repayment(self):
+	def test_loan_closure(self):
 		pledge = [{
 			"loan_security": "Test Security 1",
 			"qty": 4000.00
@@ -174,7 +174,7 @@
 		loan_application = create_loan_application('_Test Company', self.applicant2, 'Demand Loan', pledge)
 		create_pledge(loan_application)
 
-		loan = create_demand_loan(self.applicant2, "Demand Loan", loan_application, posting_date=get_first_day(nowdate()))
+		loan = create_demand_loan(self.applicant2, "Demand Loan", loan_application, posting_date='2019-10-01')
 		loan.submit()
 
 		self.assertEquals(loan.loan_amount, 1000000)
@@ -196,14 +196,16 @@
 		process_loan_interest_accrual_for_demand_loans(posting_date = last_date)
 
 		repayment_entry = create_repayment_entry(loan.name, self.applicant2, add_days(last_date, 6),
-			"Loan Closure", flt(loan.loan_amount + accrued_interest_amount))
+			flt(loan.loan_amount + accrued_interest_amount))
+
 		repayment_entry.submit()
 
 		amount = frappe.db.get_value('Loan Interest Accrual', {'loan': loan.name}, ['sum(paid_interest_amount)'])
 
-		self.assertEquals(flt(amount, 2),flt(accrued_interest_amount, 2))
+		self.assertEquals(flt(amount, 0),flt(accrued_interest_amount, 0))
 		self.assertEquals(flt(repayment_entry.penalty_amount, 5), 0)
 
+		request_loan_closure(loan.name)
 		loan.load_from_db()
 		self.assertEquals(loan.status, "Loan Closure Requested")
 
@@ -230,8 +232,7 @@
 
 		process_loan_interest_accrual_for_term_loans(posting_date=nowdate())
 
-		repayment_entry = create_repayment_entry(loan.name, self.applicant2, add_days(nowdate(), 5),
-			"Regular Payment", 89768.75)
+		repayment_entry = create_repayment_entry(loan.name, self.applicant2, add_days(nowdate(), 5), 89768.75)
 
 		repayment_entry.submit()
 
@@ -281,7 +282,7 @@
 		loan_application = create_loan_application('_Test Company', self.applicant2, 'Demand Loan', pledge)
 		create_pledge(loan_application)
 
-		loan = create_demand_loan(self.applicant2, "Demand Loan", loan_application, posting_date=get_first_day(nowdate()))
+		loan = create_demand_loan(self.applicant2, "Demand Loan", loan_application, posting_date='2019-10-01')
 		loan.submit()
 
 		self.assertEquals(loan.loan_amount, 1000000)
@@ -299,10 +300,10 @@
 		make_loan_disbursement_entry(loan.name, loan.loan_amount, disbursement_date=first_date)
 		process_loan_interest_accrual_for_demand_loans(posting_date = last_date)
 
-		repayment_entry = create_repayment_entry(loan.name, self.applicant2, add_days(last_date, 6),
-			"Loan Closure", flt(loan.loan_amount + accrued_interest_amount))
+		repayment_entry = create_repayment_entry(loan.name, self.applicant2, add_days(last_date, 6), flt(loan.loan_amount + accrued_interest_amount))
 		repayment_entry.submit()
 
+		request_loan_closure(loan.name)
 		loan.load_from_db()
 		self.assertEquals(loan.status, "Loan Closure Requested")
 
@@ -317,9 +318,9 @@
 		self.assertEqual(loan.status, 'Closed')
 		self.assertEquals(sum(pledged_qty.values()), 0)
 
-		amounts = amounts = calculate_amounts(loan.name, add_days(last_date, 6), "Regular Repayment")
-		self.assertEqual(amounts['pending_principal_amount'], 0)
-		self.assertEqual(amounts['payable_principal_amount'], 0)
+		amounts = amounts = calculate_amounts(loan.name, add_days(last_date, 6))
+		self.assertTrue(amounts['pending_principal_amount'] < 0)
+		self.assertTrue(amounts['payable_principal_amount'] < 0)
 		self.assertEqual(amounts['interest_amount'], 0)
 
 	def test_disbursal_check_with_shortfall(self):
@@ -381,7 +382,7 @@
 		loan_application = create_loan_application('_Test Company', self.applicant2, 'Demand Loan', pledge)
 		create_pledge(loan_application)
 
-		loan = create_demand_loan(self.applicant2, "Demand Loan", loan_application, posting_date=get_first_day(nowdate()))
+		loan = create_demand_loan(self.applicant2, "Demand Loan", loan_application, posting_date='2019-10-01')
 		loan.submit()
 
 		self.assertEquals(loan.loan_amount, 1000000)
@@ -399,20 +400,102 @@
 		make_loan_disbursement_entry(loan.name, loan.loan_amount, disbursement_date=first_date)
 		process_loan_interest_accrual_for_demand_loans(posting_date = last_date)
 
-		amounts = calculate_amounts(loan.name, add_days(last_date, 6), "Regular Repayment")
+		amounts = calculate_amounts(loan.name, add_days(last_date, 6))
 
-		repayment_entry = create_repayment_entry(loan.name, self.applicant2, add_days(last_date, 6),
-			"Loan Closure", flt(loan.loan_amount + accrued_interest_amount))
+		repayment_entry = create_repayment_entry(loan.name, self.applicant2, add_days(last_date, 6), flt(loan.loan_amount + accrued_interest_amount))
 		repayment_entry.submit()
 
 		amounts = frappe.db.get_value('Loan Interest Accrual', {'loan': loan.name}, ['paid_interest_amount',
 			'paid_principal_amount'])
 
+		request_loan_closure(loan.name)
 		loan.load_from_db()
 		self.assertEquals(loan.status, "Loan Closure Requested")
 
-		amounts = calculate_amounts(loan.name, add_days(last_date, 6), "Regular Repayment")
-		self.assertEquals(amounts['pending_principal_amount'], 0.0)
+		amounts = calculate_amounts(loan.name, add_days(last_date, 6))
+		self.assertTrue(amounts['pending_principal_amount'] < 0.0)
+
+	def test_partial_unaccrued_interest_payment(self):
+		pledge = [{
+			"loan_security": "Test Security 1",
+			"qty": 4000.00
+		}]
+
+		loan_application = create_loan_application('_Test Company', self.applicant2, 'Demand Loan', pledge)
+		create_pledge(loan_application)
+
+		loan = create_demand_loan(self.applicant2, "Demand Loan", loan_application, posting_date='2019-10-01')
+		loan.submit()
+
+		self.assertEquals(loan.loan_amount, 1000000)
+
+		first_date = '2019-10-01'
+		last_date = '2019-10-30'
+
+		no_of_days = date_diff(last_date, first_date) + 1
+
+		no_of_days += 5.5
+
+		# get partial unaccrued interest amount
+		paid_amount = (loan.loan_amount * loan.rate_of_interest * no_of_days) \
+			/ (days_in_year(get_datetime(first_date).year) * 100)
+
+		make_loan_disbursement_entry(loan.name, loan.loan_amount, disbursement_date=first_date)
+		process_loan_interest_accrual_for_demand_loans(posting_date = last_date)
+
+		amounts = calculate_amounts(loan.name, add_days(last_date, 6))
+
+		repayment_entry = create_repayment_entry(loan.name, self.applicant2, add_days(last_date, 6),
+			paid_amount)
+
+		repayment_entry.submit()
+		repayment_entry.load_from_db()
+
+		partial_accrued_interest_amount = (loan.loan_amount * loan.rate_of_interest * 5) \
+			/ (days_in_year(get_datetime(first_date).year) * 100)
+
+		interest_amount = flt(amounts['interest_amount'] + partial_accrued_interest_amount, 2)
+		self.assertEqual(flt(repayment_entry.total_interest_paid, 0), flt(interest_amount, 0))
+
+	def test_penalty(self):
+		pledge = [{
+			"loan_security": "Test Security 1",
+			"qty": 4000.00
+		}]
+
+		loan_application = create_loan_application('_Test Company', self.applicant2, 'Demand Loan', pledge)
+		create_pledge(loan_application)
+
+		loan = create_demand_loan(self.applicant2, "Demand Loan", loan_application, posting_date='2019-10-01')
+		loan.submit()
+
+		self.assertEquals(loan.loan_amount, 1000000)
+
+		first_date = '2019-10-01'
+		last_date = '2019-10-30'
+
+		make_loan_disbursement_entry(loan.name, loan.loan_amount, disbursement_date=first_date)
+		process_loan_interest_accrual_for_demand_loans(posting_date = last_date)
+
+		amounts = calculate_amounts(loan.name, add_days(last_date, 1))
+		paid_amount = amounts['interest_amount']/2
+
+		repayment_entry = create_repayment_entry(loan.name, self.applicant2, add_days(last_date, 6),
+			paid_amount)
+
+		repayment_entry.submit()
+
+		# 30 days - grace period
+		penalty_days = 30 - 5
+		penalty_applicable_amount = flt(amounts['interest_amount']/2, 2)
+		penalty_amount = flt((((penalty_applicable_amount * 25) / 100) * penalty_days)/365, 2)
+		process = process_loan_interest_accrual_for_demand_loans(posting_date = '2019-11-30')
+
+		calculated_penalty_amount = frappe.db.get_value('Loan Interest Accrual',
+			{'process_loan_interest_accrual': process, 'loan': loan.name}, 'penalty_amount')
+
+		self.assertEquals(calculated_penalty_amount, penalty_amount)
+
 
 def create_loan_accounts():
 	if not frappe.db.exists("Account", "Loans and Advances (Assets) - _TC"):
@@ -582,12 +665,11 @@
 			"valid_upto": to_date
 		}).insert(ignore_permissions=True)
 
-def create_repayment_entry(loan, applicant, posting_date, payment_type, paid_amount):
+def create_repayment_entry(loan, applicant, posting_date, paid_amount):
 
 	lr = frappe.get_doc({
 		"doctype": "Loan Repayment",
 		"against_loan": loan,
-		"payment_type": payment_type,
 		"company": "_Test Company",
 		"posting_date": posting_date or nowdate(),
 		"applicant": applicant,
diff --git a/erpnext/loan_management/doctype/loan_interest_accrual/loan_interest_accrual.py b/erpnext/loan_management/doctype/loan_interest_accrual/loan_interest_accrual.py
index 2d959bf..4517de0 100644
--- a/erpnext/loan_management/doctype/loan_interest_accrual/loan_interest_accrual.py
+++ b/erpnext/loan_management/doctype/loan_interest_accrual/loan_interest_accrual.py
@@ -22,7 +22,6 @@
 		if not self.interest_amount and not self.payable_principal_amount:
 			frappe.throw(_("Interest Amount or Principal Amount is mandatory"))
 
-
 	def on_submit(self):
 		self.make_gl_entries()
 
@@ -79,8 +78,11 @@
 # For Eg: If Loan disbursement date is '01-09-2019' and disbursed amount is 1000000 and
 # rate of interest is 13.5 then first loan interest accural will be on '01-10-2019'
 # which means interest will be accrued for 30 days which should be equal to 11095.89
-def calculate_accrual_amount_for_demand_loans(loan, posting_date, process_loan_interest):
+def calculate_accrual_amount_for_demand_loans(loan, posting_date, process_loan_interest, accrual_type):
+	from erpnext.loan_management.doctype.loan_repayment.loan_repayment import calculate_amounts
+
 	no_of_days = get_no_of_days_for_interest_accural(loan, posting_date)
+	precision = cint(frappe.db.get_default("currency_precision")) or 2
 
 	if no_of_days <= 0:
 		return
@@ -91,7 +93,7 @@
 	else:
 		pending_principal_amount = loan.disbursed_amount
 
-	interest_per_day = (pending_principal_amount * loan.rate_of_interest) / (days_in_year(get_datetime(posting_date).year) * 100)
+	interest_per_day = get_per_day_interest(pending_principal_amount, loan.rate_of_interest, posting_date)
 	payable_interest = interest_per_day * no_of_days
 
 	args = frappe._dict({
@@ -102,13 +104,16 @@
 		'loan_account': loan.loan_account,
 		'pending_principal_amount': pending_principal_amount,
 		'interest_amount': payable_interest,
+		'penalty_amount': calculate_amounts(loan.name, posting_date)['penalty_amount'],
 		'process_loan_interest': process_loan_interest,
-		'posting_date': posting_date
+		'posting_date': posting_date,
+		'accrual_type': accrual_type
 	})
 
-	make_loan_interest_accrual_entry(args)
+	if flt(payable_interest, precision) > 0.0:
+		make_loan_interest_accrual_entry(args)
 
-def make_accrual_interest_entry_for_demand_loans(posting_date, process_loan_interest, open_loans=None, loan_type=None):
+def make_accrual_interest_entry_for_demand_loans(posting_date, process_loan_interest, open_loans=None, loan_type=None, accrual_type="Regular"):
 	query_filters = {
 		"status": ('in', ['Disbursed', 'Partially Disbursed']),
 		"docstatus": 1
@@ -127,7 +132,7 @@
 			filters=query_filters)
 
 	for loan in open_loans:
-		calculate_accrual_amount_for_demand_loans(loan, posting_date, process_loan_interest)
+		calculate_accrual_amount_for_demand_loans(loan, posting_date, process_loan_interest, accrual_type)
 
 def make_accrual_interest_entry_for_term_loans(posting_date, process_loan_interest, term_loan=None, loan_type=None):
 	curr_date = posting_date or add_days(nowdate(), 1)
@@ -192,10 +197,12 @@
 	loan_interest_accrual.loan_account = args.loan_account
 	loan_interest_accrual.pending_principal_amount = flt(args.pending_principal_amount, precision)
 	loan_interest_accrual.interest_amount = flt(args.interest_amount, precision)
+	loan_interest_accrual.penalty_amount = flt(args.penalty_amount, precision)
 	loan_interest_accrual.posting_date = args.posting_date or nowdate()
 	loan_interest_accrual.process_loan_interest_accrual = args.process_loan_interest
 	loan_interest_accrual.repayment_schedule_name = args.repayment_schedule_name
 	loan_interest_accrual.payable_principal_amount = args.payable_principal
+	loan_interest_accrual.accrual_type = args.accrual_type
 
 	loan_interest_accrual.save()
 	loan_interest_accrual.submit()
@@ -226,3 +233,11 @@
 
 	return days
 
+def get_per_day_interest(principal_amount, rate_of_interest, posting_date=None):
+	if not posting_date:
+		posting_date = getdate()
+
+	precision = cint(frappe.db.get_default("currency_precision")) or 2
+
+	return flt((principal_amount * rate_of_interest) / (days_in_year(get_datetime(posting_date).year) * 100), 2)
+
diff --git a/erpnext/loan_management/doctype/loan_repayment/loan_repayment.json b/erpnext/loan_management/doctype/loan_repayment/loan_repayment.json
index 5942455..60b2036 100644
--- a/erpnext/loan_management/doctype/loan_repayment/loan_repayment.json
+++ b/erpnext/loan_management/doctype/loan_repayment/loan_repayment.json
@@ -10,11 +10,11 @@
   "applicant_type",
   "applicant",
   "loan_type",
-  "payment_type",
   "column_break_3",
   "company",
   "posting_date",
   "is_term_loan",
+  "rate_of_interest",
   "payment_details_section",
   "due_date",
   "pending_principal_amount",
@@ -31,6 +31,7 @@
   "column_break_21",
   "reference_date",
   "principal_amount_paid",
+  "total_interest_paid",
   "repayment_details",
   "amended_from"
  ],
@@ -96,15 +97,6 @@
    "fieldtype": "Column Break"
   },
   {
-   "default": "Regular Payment",
-   "fieldname": "payment_type",
-   "fieldtype": "Select",
-   "in_list_view": 1,
-   "label": "Payment Type",
-   "options": "\nRegular Payment\nLoan Closure",
-   "reqd": 1
-  },
-  {
    "fieldname": "payable_amount",
    "fieldtype": "Currency",
    "label": "Payable Amount",
@@ -195,6 +187,7 @@
    "fieldtype": "Currency",
    "hidden": 1,
    "label": "Principal Amount Paid",
+   "options": "Company:company:default_currency",
    "read_only": 1
   },
   {
@@ -217,11 +210,27 @@
    "hidden": 1,
    "label": "Repayment Details",
    "options": "Loan Repayment Detail"
+  },
+  {
+   "fieldname": "total_interest_paid",
+   "fieldtype": "Currency",
+   "hidden": 1,
+   "label": "Total Interest Paid",
+   "options": "Company:company:default_currency",
+   "read_only": 1
+  },
+  {
+   "fetch_from": "loan_type.rate_of_interest",
+   "fieldname": "rate_of_interest",
+   "fieldtype": "Percent",
+   "label": "Rate Of Interest",
+   "read_only": 1
   }
  ],
+ "index_web_pages_for_search": 1,
  "is_submittable": 1,
  "links": [],
- "modified": "2020-05-16 09:40:15.581165",
+ "modified": "2020-10-10 03:49:01.827593",
  "modified_by": "Administrator",
  "module": "Loan Management",
  "name": "Loan Repayment",
diff --git a/erpnext/loan_management/doctype/loan_repayment/loan_repayment.py b/erpnext/loan_management/doctype/loan_repayment/loan_repayment.py
index 97dbc44..c8344d4 100644
--- a/erpnext/loan_management/doctype/loan_repayment/loan_repayment.py
+++ b/erpnext/loan_management/doctype/loan_repayment/loan_repayment.py
@@ -14,19 +14,18 @@
 from erpnext.accounts.general_ledger import make_gl_entries
 from erpnext.loan_management.doctype.loan_security_shortfall.loan_security_shortfall import update_shortfall_status
 from erpnext.loan_management.doctype.process_loan_interest_accrual.process_loan_interest_accrual import process_loan_interest_accrual_for_demand_loans
+from erpnext.loan_management.doctype.loan_interest_accrual.loan_interest_accrual import get_per_day_interest
 
 class LoanRepayment(AccountsController):
 
 	def validate(self):
-		amounts = calculate_amounts(self.against_loan, self.posting_date, self.payment_type)
+		amounts = calculate_amounts(self.against_loan, self.posting_date)
 		self.set_missing_values(amounts)
 		self.validate_amount()
-		self.allocate_amounts(amounts['pending_accrual_entries'])
-
-	def before_submit(self):
-		self.book_unaccrued_interest()
+		self.allocate_amounts(amounts)
 
 	def on_submit(self):
+		self.book_unaccrued_interest()
 		self.update_paid_amount()
 		self.make_gl_entries()
 
@@ -72,29 +71,35 @@
 			msg = _("Paid amount cannot be less than {0}").format(self.penalty_amount)
 			frappe.throw(msg)
 
-		if self.payment_type == "Loan Closure" and flt(self.amount_paid, precision) < flt(self.payable_amount, precision):
-			msg = _("Amount of {0} is required for Loan closure").format(self.payable_amount)
-			frappe.throw(msg)
-
 	def book_unaccrued_interest(self):
-		if self.payment_type == 'Loan Closure':
-			total_interest_paid = 0
-			for payment in self.repayment_details:
-				total_interest_paid += payment.paid_interest_amount
+		precision = cint(frappe.db.get_default("currency_precision")) or 2
+		if self.total_interest_paid > self.interest_payable:
+			if not self.is_term_loan:
+				# get last loan interest accrual date
+				last_accrual_date = frappe.get_value('Loan Interest Accrual', {'loan': self.against_loan}, 'MAX(posting_date)')
 
-			if total_interest_paid < self.interest_payable:
-				if not self.is_term_loan:
-					process = process_loan_interest_accrual_for_demand_loans(posting_date=self.posting_date,
-						loan=self.against_loan)
+				# get posting date upto which interest has to be accrued
+				per_day_interest = flt(get_per_day_interest(self.pending_principal_amount,
+					self.rate_of_interest, self.posting_date), 2)
 
-					lia = frappe.db.get_value('Loan Interest Accrual', {'process_loan_interest_accrual':
-						process}, ['name', 'interest_amount', 'payable_principal_amount'], as_dict=1)
+				no_of_days = flt(flt(self.total_interest_paid - self.interest_payable,
+					precision)/per_day_interest, 0)
 
-					self.append('repayment_details', {
-						'loan_interest_accrual': lia.name,
-						'paid_interest_amount': lia.interest_amount,
-						'paid_principal_amount': lia.payable_principal_amount
-					})
+				posting_date = add_days(last_accrual_date, no_of_days)
+
+				# book excess interest paid
+				process = process_loan_interest_accrual_for_demand_loans(posting_date=posting_date,
+					loan=self.against_loan, accrual_type="Repayment")
+
+				# get loan interest accrual to update paid amount
+				lia = frappe.db.get_value('Loan Interest Accrual', {'process_loan_interest_accrual':
+					process}, ['name', 'interest_amount', 'payable_principal_amount'], as_dict=1)
+
+				self.append('repayment_details', {
+					'loan_interest_accrual': lia.name,
+					'paid_interest_amount': flt(self.total_interest_paid - self.interest_payable, precision),
+					'paid_principal_amount': 0.0
+				})
 
 	def update_paid_amount(self):
 		precision = cint(frappe.db.get_default("currency_precision")) or 2
@@ -108,12 +113,6 @@
 				WHERE name = %s""",
 				(flt(payment.paid_principal_amount, precision), flt(payment.paid_interest_amount, precision), payment.loan_interest_accrual))
 
-		if flt(loan.total_principal_paid + self.principal_amount_paid, precision) >= flt(loan.total_payment, precision):
-			if loan.is_secured_loan:
-				frappe.db.set_value("Loan", self.against_loan, "status", "Loan Closure Requested")
-			else:
-				frappe.db.set_value("Loan", self.against_loan, "status", "Closed")
-
 		frappe.db.sql(""" UPDATE `tabLoan` SET total_amount_paid = %s, total_principal_paid = %s
 			WHERE name = %s """, (loan.total_amount_paid + self.amount_paid,
 			loan.total_principal_paid + self.principal_amount_paid, self.against_loan))
@@ -137,15 +136,17 @@
 		if loan.status == "Loan Closure Requested":
 			frappe.db.set_value("Loan", self.against_loan, "status", "Disbursed")
 
-	def allocate_amounts(self, paid_entries):
+	def allocate_amounts(self, repayment_details):
+		precision = cint(frappe.db.get_default("currency_precision")) or 2
+
 		self.set('repayment_details', [])
 		self.principal_amount_paid = 0
 		total_interest_paid = 0
 		interest_paid = self.amount_paid - self.penalty_amount
 
-		if self.amount_paid - self.penalty_amount > 0 and paid_entries:
+		if self.amount_paid - self.penalty_amount > 0:
 			interest_paid = self.amount_paid - self.penalty_amount
-			for lia, amounts in iteritems(paid_entries):
+			for lia, amounts in iteritems(repayment_details.get('pending_accrual_entries', [])):
 				if amounts['interest_amount'] + amounts['payable_principal_amount'] <= interest_paid:
 					interest_amount = amounts['interest_amount']
 					paid_principal = amounts['payable_principal_amount']
@@ -169,9 +170,24 @@
 					'paid_principal_amount': paid_principal
 				})
 
-		if self.payment_type == 'Loan Closure' and total_interest_paid < self.interest_payable:
-			unaccrued_interest = self.interest_payable - total_interest_paid
-			interest_paid -= unaccrued_interest
+		if repayment_details['unaccrued_interest'] and interest_paid:
+			# no of days for which to accrue interest
+			# Interest can only be accrued for an entire day and not partial
+			if interest_paid > repayment_details['unaccrued_interest']:
+				per_day_interest = flt(get_per_day_interest(self.pending_principal_amount,
+					self.rate_of_interest, self.posting_date), precision)
+				interest_paid -= repayment_details['unaccrued_interest']
+				total_interest_paid += repayment_details['unaccrued_interest']
+			else:
+				# get no of days for which interest can be paid
+				per_day_interest = flt(get_per_day_interest(self.pending_principal_amount,
+					self.rate_of_interest, self.posting_date), precision)
+
+				no_of_days = cint(interest_paid/per_day_interest)
+				total_interest_paid += no_of_days * per_day_interest
+				interest_paid -= no_of_days * per_day_interest
+
+		self.total_interest_paid = total_interest_paid
 
 		if interest_paid:
 			self.principal_amount_paid += interest_paid
@@ -289,7 +305,7 @@
 # This function returns the amounts that are payable at the time of loan repayment based on posting date
 # So it pulls all the unpaid Loan Interest Accrual Entries and calculates the penalty if applicable
 
-def get_amounts(amounts, against_loan, posting_date, payment_type):
+def get_amounts(amounts, against_loan, posting_date):
 	precision = cint(frappe.db.get_default("currency_precision")) or 2
 
 	against_loan_doc = frappe.get_doc("Loan", against_loan)
@@ -332,15 +348,16 @@
 	else:
 		pending_principal_amount = against_loan_doc.disbursed_amount
 
-	if payment_type == "Loan Closure":
-		if due_date:
-			pending_days = date_diff(posting_date, due_date) + 1
-		else:
-			pending_days = date_diff(posting_date, against_loan_doc.disbursement_date) + 1
+	unaccrued_interest = 0
+	if due_date:
+		pending_days = date_diff(posting_date, due_date) + 1
+	else:
+		pending_days = date_diff(posting_date, against_loan_doc.disbursement_date) + 1
 
-		payable_principal_amount = pending_principal_amount
-		per_day_interest = (payable_principal_amount * (loan_type_details.rate_of_interest / 100))/365
-		total_pending_interest += (pending_days * per_day_interest)
+	if pending_days > 0:
+		payable_principal_amount = flt(pending_principal_amount, precision)
+		per_day_interest = get_per_day_interest(payable_principal_amount, loan_type_details.rate_of_interest, posting_date)
+		unaccrued_interest += (pending_days * flt(per_day_interest, precision))
 
 	amounts["pending_principal_amount"] = flt(pending_principal_amount, precision)
 	amounts["payable_principal_amount"] = flt(payable_principal_amount, precision)
@@ -348,6 +365,7 @@
 	amounts["penalty_amount"] = flt(penalty_amount, precision)
 	amounts["payable_amount"] = flt(payable_principal_amount + total_pending_interest + penalty_amount, precision)
 	amounts["pending_accrual_entries"] = pending_accrual_entries
+	amounts["unaccrued_interest"] = unaccrued_interest
 
 	if final_due_date:
 		amounts["due_date"] = final_due_date
@@ -355,7 +373,7 @@
 	return amounts
 
 @frappe.whitelist()
-def calculate_amounts(against_loan, posting_date, payment_type):
+def calculate_amounts(against_loan, posting_date, payment_type=''):
 
 	amounts = {
 		'penalty_amount': 0.0,
@@ -363,10 +381,14 @@
 		'pending_principal_amount': 0.0,
 		'payable_principal_amount': 0.0,
 		'payable_amount': 0.0,
+		'unaccrued_interest': 0.0,
 		'due_date': ''
 	}
 
-	amounts = get_amounts(amounts, against_loan, posting_date, payment_type)
+	amounts = get_amounts(amounts, against_loan, posting_date)
+
+	if payment_type == 'Loan Closure':
+		amounts['payable_amount'] += amounts['unaccrued_interest']
 
 	return amounts