diff --git a/erpnext/loan_management/doctype/loan/test_loan.py b/erpnext/loan_management/doctype/loan/test_loan.py
index 5faf80e6257..f225409f628 100644
--- a/erpnext/loan_management/doctype/loan/test_loan.py
+++ b/erpnext/loan_management/doctype/loan/test_loan.py
@@ -199,10 +199,9 @@ class TestLoan(unittest.TestCase):
 			"Loan Closure", 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'])
+		amount = frappe.db.get_value('Loan Interest Accrual', {'loan': loan.name}, ['sum(paid_interest_amount)'])
 
-		self.assertEquals(flt(amounts[0], 2),flt(accrued_interest_amount, 2))
+		self.assertEquals(flt(amount, 2),flt(accrued_interest_amount, 2))
 		self.assertEquals(flt(repayment_entry.penalty_amount, 5), 0)
 
 		loan.load_from_db()
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 1d3fa710681..2d959bf3be6 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
@@ -213,7 +213,8 @@ def get_last_accural_date_in_current_month(loan):
 		WHERE loan = %s""", (loan.name))
 
 	if last_posting_date[0][0]:
-		return last_posting_date[0][0]
+		# interest for last interest accrual date is already booked, so add 1 day
+		return add_days(last_posting_date[0][0], 1)
 	else:
 		return loan.disbursement_date
 
diff --git a/erpnext/loan_management/doctype/loan_repayment/loan_repayment.py b/erpnext/loan_management/doctype/loan_repayment/loan_repayment.py
index 7d83e322135..47fb885f8a2 100644
--- a/erpnext/loan_management/doctype/loan_repayment/loan_repayment.py
+++ b/erpnext/loan_management/doctype/loan_repayment/loan_repayment.py
@@ -13,6 +13,7 @@ from frappe.utils import date_diff, add_days, getdate, add_months, get_first_day
 from erpnext.controllers.accounts_controller import AccountsController
 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
 
 class LoanRepayment(AccountsController):
 
@@ -22,6 +23,9 @@ class LoanRepayment(AccountsController):
 		self.validate_amount()
 		self.allocate_amounts(amounts['pending_accrual_entries'])
 
+	def before_submit(self):
+		self.book_unaccrued_interest()
+
 	def on_submit(self):
 		self.update_paid_amount()
 		self.make_gl_entries()
@@ -72,6 +76,26 @@ class LoanRepayment(AccountsController):
 			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
+
+			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)
+
+					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': lia.interest_amount,
+						'paid_principal_amount': lia.payable_principal_amount
+					})
+
 	def update_paid_amount(self):
 		precision = cint(frappe.db.get_default("currency_precision")) or 2
 
@@ -148,8 +172,6 @@ class LoanRepayment(AccountsController):
 		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 self.repayment_details:
-				self.repayment_details[-1].paid_interest_amount += unaccrued_interest
 
 		if interest_paid:
 			self.principal_amount_paid += interest_paid
diff --git a/erpnext/loan_management/doctype/process_loan_interest_accrual/process_loan_interest_accrual.py b/erpnext/loan_management/doctype/process_loan_interest_accrual/process_loan_interest_accrual.py
index cd3cf7ec96b..0fa96860d08 100644
--- a/erpnext/loan_management/doctype/process_loan_interest_accrual/process_loan_interest_accrual.py
+++ b/erpnext/loan_management/doctype/process_loan_interest_accrual/process_loan_interest_accrual.py
@@ -36,6 +36,8 @@ def process_loan_interest_accrual_for_demand_loans(posting_date=None, loan_type=
 
 	loan_process.submit()
 
+	return loan_process.name
+
 def process_loan_interest_accrual_for_term_loans(posting_date=None, loan_type=None, loan=None):
 
 	if not term_loan_accrual_pending(posting_date or nowdate()):
@@ -49,6 +51,8 @@ def process_loan_interest_accrual_for_term_loans(posting_date=None, loan_type=No
 
 	loan_process.submit()
 
+	return loan_process.name
+
 def term_loan_accrual_pending(date):
 	pending_accrual = frappe.db.get_value('Repayment Schedule', {
 		'payment_date': ('<=', date),