diff --git a/mifosng-provider/src/main/java/org/mifosplatform/accounting/journalentry/service/AccountingProcessorHelper.java b/mifosng-provider/src/main/java/org/mifosplatform/accounting/journalentry/service/AccountingProcessorHelper.java
index d1121617f..b0fbb8820 100755
--- a/mifosng-provider/src/main/java/org/mifosplatform/accounting/journalentry/service/AccountingProcessorHelper.java
+++ b/mifosng-provider/src/main/java/org/mifosplatform/accounting/journalentry/service/AccountingProcessorHelper.java
@@ -85,34 +85,103 @@ public class AccountingProcessorHelper {
                 newLoanTransactions);
     }
 
-    public GLAccount getLinkedCashAccountsForLoanProduct(final Long loanProductId, final CASH_ACCOUNTS_FOR_LOAN finAccountType) {
-        final ProductToGLAccountMapping accountMapping = this.accountMappingRepository
-                .findByProductIdAndProductTypeAndFinancialAccountType(loanProductId, PortfolioProductType.LOAN.getValue(),
-                        finAccountType.getValue());
-        return accountMapping.getGlAccount();
+    /**
+     * Convenience method that creates a pair of related Debits and Credits for
+     * Accrual Based accounting.
+     * 
+     * The target accounts for debits and credits are switched in case of a
+     * reversal
+     * 
+     * @param office
+     * @param accountTypeToBeDebited
+     *            Enum of the placeholder GLAccount to be debited
+     * @param accountTypeToBeCredited
+     *            Enum of the placeholder of the GLAccount to be credited
+     * @param loanProductId
+     * @param loanId
+     * @param transactionId
+     * @param transactionDate
+     * @param amount
+     * @param isReversal
+     */
+    public void createAccrualBasedJournalEntriesAndReversalsForLoan(final Office office,
+            final ACCRUAL_ACCOUNTS_FOR_LOAN accountTypeToBeDebited, final ACCRUAL_ACCOUNTS_FOR_LOAN accountTypeToBeCredited,
+            final Long loanProductId, final Long loanId, final String transactionId, final Date transactionDate, final BigDecimal amount,
+            final Boolean isReversal) {
+        int accountTypeToDebitId = accountTypeToBeDebited.getValue();
+        int accountTypeToCreditId = accountTypeToBeCredited.getValue();
+        // reverse debits and credits for reversals
+        if (isReversal) {
+            accountTypeToDebitId = accountTypeToBeCredited.getValue();
+            accountTypeToCreditId = accountTypeToBeDebited.getValue();
+        }
+        createJournalEntriesForLoan(office, accountTypeToDebitId, accountTypeToCreditId, loanProductId, loanId, transactionId,
+                transactionDate, amount);
     }
 
-    public GLAccount getLinkedAccrualAccountsForLoanProduct(final Long loanProductId, final ACCRUAL_ACCOUNTS_FOR_LOAN finAccountType) {
-        final ProductToGLAccountMapping accountMapping = this.accountMappingRepository
-                .findByProductIdAndProductTypeAndFinancialAccountType(loanProductId, PortfolioProductType.LOAN.getValue(),
-                        finAccountType.getValue());
-        return accountMapping.getGlAccount();
+    /**
+     * Convenience method that creates a pair of related Debits and Credits for
+     * Cash Based accounting.
+     * 
+     * The target accounts for debits and credits are switched in case of a
+     * reversal
+     * 
+     * @param office
+     * @param accountTypeToBeDebited
+     *            Enum of the placeholder GLAccount to be debited
+     * @param accountTypeToBeCredited
+     *            Enum of the placeholder of the GLAccount to be credited
+     * @param loanProductId
+     * @param loanId
+     * @param transactionId
+     * @param transactionDate
+     * @param amount
+     * @param isReversal
+     */
+    public void createCashBasedJournalEntriesAndReversalsForLoan(final Office office, final CASH_ACCOUNTS_FOR_LOAN accountTypeToBeDebited,
+            final CASH_ACCOUNTS_FOR_LOAN accountTypeToBeCredited, final Long loanProductId, final Long loanId, final String transactionId,
+            final Date transactionDate, final BigDecimal amount, final Boolean isReversal) {
+        int accountTypeToDebitId = accountTypeToBeDebited.getValue();
+        int accountTypeToCreditId = accountTypeToBeCredited.getValue();
+        // reverse debits and credits for reversals
+        if (isReversal) {
+            accountTypeToDebitId = accountTypeToBeCredited.getValue();
+            accountTypeToCreditId = accountTypeToBeDebited.getValue();
+        }
+        createJournalEntriesForLoan(office, accountTypeToDebitId, accountTypeToCreditId, loanProductId, loanId, transactionId,
+                transactionDate, amount);
     }
 
-    public void createCreditJournalEntryForLoanProduct(final Office office, final GLAccount account, final Long loanId,
-            final String transactionId, final Date transactionDate, final BigDecimal amount) {
-        final boolean manualEntry = false;
-        final JournalEntry journalEntry = JournalEntry.createNew(office, account, transactionId, manualEntry, transactionDate,
-                JournalEntryType.CREDIT, amount, null, PortfolioProductType.LOAN.getValue(), loanId);
-        this.glJournalEntryRepository.saveAndFlush(journalEntry);
+    public void createCreditJournalEntryOrReversalForLoan(final Office office, final CASH_ACCOUNTS_FOR_LOAN accountMappingType,
+            final Long loanProductId, final Long loanId, final String transactionId, final Date transactionDate, final BigDecimal amount,
+            final Boolean isReversal) {
+        int accountMappingTypeId = accountMappingType.getValue();
+        createCreditJournalEntryOrReversalForLoan(office, accountMappingTypeId, loanProductId, loanId, transactionId, transactionDate,
+                amount, isReversal);
     }
 
-    public void createDebitJournalEntryForLoanProduct(final Office office, final GLAccount account, final Long loanId,
-            final String transactionId, final Date transactionDate, final BigDecimal amount) {
-        final boolean manualEntry = false;
-        final JournalEntry journalEntry = JournalEntry.createNew(office, account, transactionId, manualEntry, transactionDate,
-                JournalEntryType.DEBIT, amount, null, PortfolioProductType.LOAN.getValue(), loanId);
-        this.glJournalEntryRepository.saveAndFlush(journalEntry);
+    public void createCreditJournalEntryOrReversalForLoan(final Office office, final ACCRUAL_ACCOUNTS_FOR_LOAN accountMappingType,
+            final Long loanProductId, final Long loanId, final String transactionId, final Date transactionDate, final BigDecimal amount,
+            final Boolean isReversal) {
+        int accountMappingTypeId = accountMappingType.getValue();
+        createCreditJournalEntryOrReversalForLoan(office, accountMappingTypeId, loanProductId, loanId, transactionId, transactionDate,
+                amount, isReversal);
+    }
+
+    public void createDebitJournalEntryOrReversalForLoan(final Office office, final CASH_ACCOUNTS_FOR_LOAN accountMappingType,
+            final Long loanProductId, final Long loanId, final String transactionId, final Date transactionDate, final BigDecimal amount,
+            final Boolean isReversal) {
+        int accountMappingTypeId = accountMappingType.getValue();
+        createDebitJournalEntryOrReversalForLoan(office, accountMappingTypeId, loanProductId, loanId, transactionId, transactionDate,
+                amount, isReversal);
+    }
+
+    public void createDebitJournalEntryOrReversalForLoan(final Office office, final ACCRUAL_ACCOUNTS_FOR_LOAN accountMappingType,
+            final Long loanProductId, final Long loanId, final String transactionId, final Date transactionDate, final BigDecimal amount,
+            final Boolean isReversal) {
+        int accountMappingTypeId = accountMappingType.getValue();
+        createDebitJournalEntryOrReversalForLoan(office, accountMappingTypeId, loanProductId, loanId, transactionId, transactionDate,
+                amount, isReversal);
     }
 
     /**
@@ -138,4 +207,55 @@ public class AccountingProcessorHelper {
         return this.officeRepository.findOne(officeId);
     }
 
+    private void createJournalEntriesForLoan(final Office office, final int accountTypeToDebitId, final int accountTypeToCreditId,
+            final Long loanProductId, final Long loanId, final String transactionId, final Date transactionDate, final BigDecimal amount) {
+        GLAccount debitAccount = getLinkedGLAccountForLoanProduct(loanProductId, accountTypeToDebitId);
+        GLAccount creditAccount = getLinkedGLAccountForLoanProduct(loanProductId, accountTypeToCreditId);
+        createCreditJournalEntryForLoan(office, debitAccount, loanId, transactionId, transactionDate, amount);
+        createDebitJournalEntryForLoan(office, creditAccount, loanId, transactionId, transactionDate, amount);
+    }
+
+    private void createDebitJournalEntryOrReversalForLoan(final Office office, final int accountMappingTypeId, final Long loanProductId,
+            final Long loanId, final String transactionId, final Date transactionDate, final BigDecimal amount, final Boolean isReversal) {
+        GLAccount account = getLinkedGLAccountForLoanProduct(loanProductId, accountMappingTypeId);
+        if (isReversal) {
+            createCreditJournalEntryForLoan(office, account, loanId, transactionId, transactionDate, amount);
+        } else {
+            createDebitJournalEntryForLoan(office, account, loanId, transactionId, transactionDate, amount);
+        }
+    }
+
+    private void createCreditJournalEntryOrReversalForLoan(final Office office, final int accountMappingTypeId, final Long loanProductId,
+            final Long loanId, final String transactionId, final Date transactionDate, final BigDecimal amount, final Boolean isReversal) {
+        GLAccount account = getLinkedGLAccountForLoanProduct(loanProductId, accountMappingTypeId);
+        if (isReversal) {
+            createDebitJournalEntryForLoan(office, account, loanId, transactionId, transactionDate, amount);
+        } else {
+            createCreditJournalEntryForLoan(office, account, loanId, transactionId, transactionDate, amount);
+        }
+    }
+
+    private void createCreditJournalEntryForLoan(final Office office, final GLAccount account, final Long loanId,
+            final String transactionId, final Date transactionDate, final BigDecimal amount) {
+        final boolean manualEntry = false;
+        final JournalEntry journalEntry = JournalEntry.createNew(office, account, transactionId, manualEntry, transactionDate,
+                JournalEntryType.CREDIT, amount, null, PortfolioProductType.LOAN.getValue(), loanId);
+        this.glJournalEntryRepository.saveAndFlush(journalEntry);
+    }
+
+    private void createDebitJournalEntryForLoan(final Office office, final GLAccount account, final Long loanId,
+            final String transactionId, final Date transactionDate, final BigDecimal amount) {
+        final boolean manualEntry = false;
+        final JournalEntry journalEntry = JournalEntry.createNew(office, account, transactionId, manualEntry, transactionDate,
+                JournalEntryType.DEBIT, amount, null, PortfolioProductType.LOAN.getValue(), loanId);
+        this.glJournalEntryRepository.saveAndFlush(journalEntry);
+    }
+
+    private GLAccount getLinkedGLAccountForLoanProduct(final Long loanProductId, final int accountMappingTypeId) {
+        final ProductToGLAccountMapping accountMapping = this.accountMappingRepository
+                .findByProductIdAndProductTypeAndFinancialAccountType(loanProductId, PortfolioProductType.LOAN.getValue(),
+                        accountMappingTypeId);
+        return accountMapping.getGlAccount();
+    }
+
 }
diff --git a/mifosng-provider/src/main/java/org/mifosplatform/accounting/journalentry/service/AccrualBasedAccountingProcessorForLoan.java b/mifosng-provider/src/main/java/org/mifosplatform/accounting/journalentry/service/AccrualBasedAccountingProcessorForLoan.java
index e7a352613..f156be428 100755
--- a/mifosng-provider/src/main/java/org/mifosplatform/accounting/journalentry/service/AccrualBasedAccountingProcessorForLoan.java
+++ b/mifosng-provider/src/main/java/org/mifosplatform/accounting/journalentry/service/AccrualBasedAccountingProcessorForLoan.java
@@ -5,7 +5,6 @@ import java.util.Date;
 
 import org.mifosplatform.accounting.closure.domain.GLClosure;
 import org.mifosplatform.accounting.common.AccountingConstants.ACCRUAL_ACCOUNTS_FOR_LOAN;
-import org.mifosplatform.accounting.glaccount.domain.GLAccount;
 import org.mifosplatform.accounting.journalentry.data.LoanDTO;
 import org.mifosplatform.accounting.journalentry.data.LoanTransactionDTO;
 import org.mifosplatform.organisation.office.domain.Office;
@@ -36,7 +35,9 @@ public class AccrualBasedAccountingProcessorForLoan implements AccountingProcess
             }
 
             /*** Handle Apply charges ***/
-            // TODO
+            else if (loanTransactionDTO.getTransactionType().isApplyCharges()) {
+                createJournalEntriesForApplyCharges(loanDTO, loanTransactionDTO, office);
+            }
 
             /***
              * Handle repayments, repayments at disbursement and reversal of
@@ -44,13 +45,13 @@ public class AccrualBasedAccountingProcessorForLoan implements AccountingProcess
              ***/
             else if (loanTransactionDTO.getTransactionType().isRepayment()
                     || loanTransactionDTO.getTransactionType().isRepaymentAtDisbursement()) {
-                createJournalEntriesForRepayments(loanDTO, loanTransactionDTO, office);
+                createJournalEntriesForRepaymentsAndWriteOffs(loanDTO, loanTransactionDTO, office, false);
             }
 
-            /** Handle Write Offs and waivers **/
+            /** Handle Write Offs, waivers and thier reversals **/
             else if ((loanTransactionDTO.getTransactionType().isWriteOff() || loanTransactionDTO.getTransactionType().isWaiveInterest() || loanTransactionDTO
                     .getTransactionType().isWaiveCharges())) {
-                createJournalEntriesForWriteOff(loanDTO, loanTransactionDTO, office);
+                createJournalEntriesForRepaymentsAndWriteOffs(loanDTO, loanTransactionDTO, office, true);
             }
         }
     }
@@ -79,136 +80,38 @@ public class AccrualBasedAccountingProcessorForLoan implements AccountingProcess
 
         // create journal entries for the disbursement (or disbursement
         // reversal)
-        final GLAccount loanPortfolioAccount = helper.getLinkedAccrualAccountsForLoanProduct(loanProductId,
-                ACCRUAL_ACCOUNTS_FOR_LOAN.LOAN_PORTFOLIO);
-        final GLAccount fundSourceAccount = helper.getLinkedAccrualAccountsForLoanProduct(loanProductId,
-                ACCRUAL_ACCOUNTS_FOR_LOAN.FUND_SOURCE);
-        if (isReversed) {
-            helper.createCreditJournalEntryForLoanProduct(office, loanPortfolioAccount, loanId, transactionId, transactionDate,
-                    disbursalAmount);
-            helper.createDebitJournalEntryForLoanProduct(office, fundSourceAccount, loanId, transactionId, transactionDate, disbursalAmount);
-        } else {
-            helper.createDebitJournalEntryForLoanProduct(office, loanPortfolioAccount, loanId, transactionId, transactionDate,
-                    disbursalAmount);
-            helper.createCreditJournalEntryForLoanProduct(office, fundSourceAccount, loanId, transactionId, transactionDate,
-                    disbursalAmount);
-        }
+        helper.createAccrualBasedJournalEntriesAndReversalsForLoan(office, ACCRUAL_ACCOUNTS_FOR_LOAN.LOAN_PORTFOLIO,
+                ACCRUAL_ACCOUNTS_FOR_LOAN.FUND_SOURCE, loanProductId, loanId, transactionId, transactionDate, disbursalAmount, isReversed);
 
         // create journal entries for recognising interest (or reversal)
         BigDecimal interestApplied = loanDTO.getCalculatedInterest();
         if (interestApplied != null && !(interestApplied.compareTo(BigDecimal.ZERO) == 0)) {
-
-            final GLAccount interestReceivableAccount = helper.getLinkedAccrualAccountsForLoanProduct(loanProductId,
-                    ACCRUAL_ACCOUNTS_FOR_LOAN.INTEREST_RECEIVABLE);
-            final GLAccount interestOnLoansAccount = helper.getLinkedAccrualAccountsForLoanProduct(loanProductId,
-                    ACCRUAL_ACCOUNTS_FOR_LOAN.INTEREST_ON_LOANS);
-            if (isReversed) {
-                helper.createDebitJournalEntryForLoanProduct(office, interestOnLoansAccount, loanId, transactionId, transactionDate,
-                        interestApplied);
-                helper.createCreditJournalEntryForLoanProduct(office, interestReceivableAccount, loanId, transactionId, transactionDate,
-                        interestApplied);
-            } else {
-                helper.createDebitJournalEntryForLoanProduct(office, interestReceivableAccount, loanId, transactionId, transactionDate,
-                        interestApplied);
-                helper.createCreditJournalEntryForLoanProduct(office, interestOnLoansAccount, loanId, transactionId, transactionDate,
-                        interestApplied);
-            }
+            helper.createAccrualBasedJournalEntriesAndReversalsForLoan(office, ACCRUAL_ACCOUNTS_FOR_LOAN.INTEREST_RECEIVABLE,
+                    ACCRUAL_ACCOUNTS_FOR_LOAN.INTEREST_ON_LOANS, loanProductId, loanId, transactionId, transactionDate, disbursalAmount,
+                    isReversed);
         }
     }
 
     /**
-     * Create a single Debit for fund source and multiple credits if applicable
-     * (loan portfolio for principal repayments, Interest receivable for
-     * interest repayments, Fee receivable for fees payment and Penalty
-     * Receivable from penalties for penalty payment)
      * 
+     * Handles repayments using the following posting rules <br/>
+     * <br/>
      * <br/>
      * 
-     * In case the loan transaction has been reversed, all debits are turned
-     * into credits and vice versa
-     */
-    private void createJournalEntriesForRepayments(final LoanDTO loanDTO, final LoanTransactionDTO loanTransactionDTO, final Office office) {
-        // loan properties
-        final Long loanProductId = loanDTO.getLoanProductId();
-        final Long loanId = loanDTO.getLoanId();
-
-        // transaction properties
-        final String transactionId = loanTransactionDTO.getTransactionId();
-        final Date transactionDate = loanTransactionDTO.getTransactionDate();
-        final BigDecimal principalAmount = loanTransactionDTO.getPrincipal();
-        final BigDecimal interestAmount = loanTransactionDTO.getInterest();
-        final BigDecimal feesAmount = loanTransactionDTO.getFees();
-        final BigDecimal penaltiesAmount = loanTransactionDTO.getPenalties();
-        final boolean isReversed = loanTransactionDTO.isReversed();
-
-        BigDecimal totalDebitAmount = new BigDecimal(0);
-
-        if (principalAmount != null && !(principalAmount.compareTo(BigDecimal.ZERO) == 0)) {
-            totalDebitAmount = totalDebitAmount.add(principalAmount);
-
-            final GLAccount loanPortfolioAccount = helper.getLinkedAccrualAccountsForLoanProduct(loanProductId,
-                    ACCRUAL_ACCOUNTS_FOR_LOAN.LOAN_PORTFOLIO);
-            if (isReversed) {
-                helper.createDebitJournalEntryForLoanProduct(office, loanPortfolioAccount, loanId, transactionId, transactionDate,
-                        principalAmount);
-            } else {
-                helper.createCreditJournalEntryForLoanProduct(office, loanPortfolioAccount, loanId, transactionId, transactionDate,
-                        principalAmount);
-            }
-        }
-        if (interestAmount != null && !(interestAmount.compareTo(BigDecimal.ZERO) == 0)) {
-            totalDebitAmount = totalDebitAmount.add(interestAmount);
-
-            final GLAccount interestAccount = helper.getLinkedAccrualAccountsForLoanProduct(loanProductId,
-                    ACCRUAL_ACCOUNTS_FOR_LOAN.INTEREST_RECEIVABLE);
-            if (isReversed) {
-                helper.createDebitJournalEntryForLoanProduct(office, interestAccount, loanId, transactionId, transactionDate,
-                        interestAmount);
-            } else {
-                helper.createCreditJournalEntryForLoanProduct(office, interestAccount, loanId, transactionId, transactionDate,
-                        interestAmount);
-            }
-        }
-        if (feesAmount != null && !(feesAmount.compareTo(BigDecimal.ZERO) == 0)) {
-            totalDebitAmount = totalDebitAmount.add(feesAmount);
-
-            final GLAccount incomeFromFeesAccount = helper.getLinkedAccrualAccountsForLoanProduct(loanProductId,
-                    ACCRUAL_ACCOUNTS_FOR_LOAN.FEES_RECEIVABLE);
-            if (isReversed) {
-                helper.createDebitJournalEntryForLoanProduct(office, incomeFromFeesAccount, loanId, transactionId, transactionDate,
-                        feesAmount);
-            } else {
-                helper.createCreditJournalEntryForLoanProduct(office, incomeFromFeesAccount, loanId, transactionId, transactionDate,
-                        feesAmount);
-            }
-        }
-        if (penaltiesAmount != null && !(penaltiesAmount.compareTo(BigDecimal.ZERO) == 0)) {
-            totalDebitAmount = totalDebitAmount.add(penaltiesAmount);
-
-            final GLAccount incomeFromPenaltiesAccount = helper.getLinkedAccrualAccountsForLoanProduct(loanProductId,
-                    ACCRUAL_ACCOUNTS_FOR_LOAN.PENALTIES_RECEIVABLE);
-            if (isReversed) {
-                helper.createDebitJournalEntryForLoanProduct(office, incomeFromPenaltiesAccount, loanId, transactionId, transactionDate,
-                        penaltiesAmount);
-            } else {
-                helper.createCreditJournalEntryForLoanProduct(office, incomeFromPenaltiesAccount, loanId, transactionId, transactionDate,
-                        penaltiesAmount);
-            }
-        }
-        final GLAccount fundSourceAccount = helper.getLinkedAccrualAccountsForLoanProduct(loanProductId,
-                ACCRUAL_ACCOUNTS_FOR_LOAN.FUND_SOURCE);
-        if (isReversed) {
-            helper.createCreditJournalEntryForLoanProduct(office, fundSourceAccount, loanId, transactionId, transactionDate,
-                    totalDebitAmount);
-        } else {
-            helper.createDebitJournalEntryForLoanProduct(office, fundSourceAccount, loanId, transactionId, transactionDate,
-                    totalDebitAmount);
-        }
-    }
-
-    /**
-     * Handles write offs using the following posting rules <br/>
+     * <b>Principal Repayment</b>: Debits "Fund Source" and Credits
+     * "Loan Portfolio"<br/>
      * 
+     * <b>Interest Repayment</b>:Debits "Fund Source" and and Credits
+     * "Receivable Interest" <br/>
+     * 
+     * <b>Fee Write Repayment</b>:Debits "Fund Source" and and Credits
+     * "Receivable Fees" <br/>
+     * 
+     * <b>Penalty Repayment</b>: Debits "Fund Source" and and Credits
+     * "Receivable Penalties" <br/>
+     * <br/>
+     * Handles write offs using the following posting rules <br/>
+     * <br/>
      * <b>Principal Write off</b>: Debits "Losses Written Off" and Credits
      * "Loan Portfolio"<br/>
      * 
@@ -220,12 +123,18 @@ public class AccrualBasedAccountingProcessorForLoan implements AccountingProcess
      * 
      * <b>Penalty Write off</b>: Debits "Losses Written off" and and Credits
      * "Receivable Penalties" <br/>
+     * <br/>
+     * <br/>
+     * In case the loan transaction has been reversed, all debits are turned
+     * into credits and vice versa
      * 
      * @param loanTransactionDTO
      * @param loanDTO
      * @param office
+     * 
      */
-    private void createJournalEntriesForWriteOff(final LoanDTO loanDTO, final LoanTransactionDTO loanTransactionDTO, final Office office) {
+    private void createJournalEntriesForRepaymentsAndWriteOffs(final LoanDTO loanDTO, final LoanTransactionDTO loanTransactionDTO,
+            final Office office, final boolean writeOff) {
         // loan properties
         final Long loanProductId = loanDTO.getLoanProductId();
         final Long loanId = loanDTO.getLoanId();
@@ -237,71 +146,90 @@ public class AccrualBasedAccountingProcessorForLoan implements AccountingProcess
         final BigDecimal interestAmount = loanTransactionDTO.getInterest();
         final BigDecimal feesAmount = loanTransactionDTO.getFees();
         final BigDecimal penaltiesAmount = loanTransactionDTO.getPenalties();
-        final boolean isReversed = loanTransactionDTO.isReversed();
+        final boolean isReversal = loanTransactionDTO.isReversed();
 
         BigDecimal totalDebitAmount = new BigDecimal(0);
 
+        // handle principle payment or writeOff (and reversals)
         if (principalAmount != null && !(principalAmount.compareTo(BigDecimal.ZERO) == 0)) {
             totalDebitAmount = totalDebitAmount.add(principalAmount);
-
-            final GLAccount loanPortfolioAccount = helper.getLinkedAccrualAccountsForLoanProduct(loanProductId,
-                    ACCRUAL_ACCOUNTS_FOR_LOAN.LOAN_PORTFOLIO);
-            if (isReversed) {
-                helper.createDebitJournalEntryForLoanProduct(office, loanPortfolioAccount, loanId, transactionId, transactionDate,
-                        principalAmount);
-            } else {
-                helper.createCreditJournalEntryForLoanProduct(office, loanPortfolioAccount, loanId, transactionId, transactionDate,
-                        principalAmount);
-            }
-
+            helper.createCreditJournalEntryOrReversalForLoan(office, ACCRUAL_ACCOUNTS_FOR_LOAN.LOAN_PORTFOLIO, loanProductId, loanId,
+                    transactionId, transactionDate, principalAmount, isReversal);
         }
+
+        // handle interest payment of writeOff (and reversals)
         if (interestAmount != null && !(interestAmount.compareTo(BigDecimal.ZERO) == 0)) {
             totalDebitAmount = totalDebitAmount.add(interestAmount);
-
-            final GLAccount interestAccount = helper.getLinkedAccrualAccountsForLoanProduct(loanProductId,
-                    ACCRUAL_ACCOUNTS_FOR_LOAN.INTEREST_RECEIVABLE);
-            if (isReversed) {
-                helper.createDebitJournalEntryForLoanProduct(office, interestAccount, loanId, transactionId, transactionDate,
-                        interestAmount);
-            } else {
-                helper.createCreditJournalEntryForLoanProduct(office, interestAccount, loanId, transactionId, transactionDate,
-                        interestAmount);
-            }
+            helper.createCreditJournalEntryOrReversalForLoan(office, ACCRUAL_ACCOUNTS_FOR_LOAN.INTEREST_RECEIVABLE, loanProductId, loanId,
+                    transactionId, transactionDate, interestAmount, isReversal);
         }
+
+        // handle fees payment of writeOff (and reversals)
         if (feesAmount != null && !(feesAmount.compareTo(BigDecimal.ZERO) == 0)) {
             totalDebitAmount = totalDebitAmount.add(feesAmount);
-
-            final GLAccount incomeFromFeesAccount = helper.getLinkedAccrualAccountsForLoanProduct(loanProductId,
-                    ACCRUAL_ACCOUNTS_FOR_LOAN.FEES_RECEIVABLE);
-            if (isReversed) {
-                helper.createDebitJournalEntryForLoanProduct(office, incomeFromFeesAccount, loanId, transactionId, transactionDate,
-                        feesAmount);
-            } else {
-                helper.createCreditJournalEntryForLoanProduct(office, incomeFromFeesAccount, loanId, transactionId, transactionDate,
-                        feesAmount);
-            }
+            helper.createCreditJournalEntryOrReversalForLoan(office, ACCRUAL_ACCOUNTS_FOR_LOAN.FEES_RECEIVABLE, loanProductId, loanId,
+                    transactionId, transactionDate, feesAmount, isReversal);
         }
+
+        // handle penalties payment of writeOff (and reversals)
         if (penaltiesAmount != null && !(penaltiesAmount.compareTo(BigDecimal.ZERO) == 0)) {
             totalDebitAmount = totalDebitAmount.add(penaltiesAmount);
-
-            final GLAccount incomeFromPenaltiesAccount = helper.getLinkedAccrualAccountsForLoanProduct(loanProductId,
-                    ACCRUAL_ACCOUNTS_FOR_LOAN.PENALTIES_RECEIVABLE);
-            if (isReversed) {
-                helper.createDebitJournalEntryForLoanProduct(office, incomeFromPenaltiesAccount, loanId, transactionId, transactionDate,
-                        penaltiesAmount);
-            } else {
-                helper.createCreditJournalEntryForLoanProduct(office, incomeFromPenaltiesAccount, loanId, transactionId, transactionDate,
-                        penaltiesAmount);
-            }
+            helper.createCreditJournalEntryOrReversalForLoan(office, ACCRUAL_ACCOUNTS_FOR_LOAN.PENALTIES_RECEIVABLE, loanProductId, loanId,
+                    transactionId, transactionDate, penaltiesAmount, isReversal);
         }
-        final GLAccount fundSourceAccount = helper.getLinkedAccrualAccountsForLoanProduct(loanProductId,
-                ACCRUAL_ACCOUNTS_FOR_LOAN.LOSSES_WRITTEN_OFF);
-        if (isReversed) {
-            helper.createCreditJournalEntryForLoanProduct(office, fundSourceAccount, loanId, transactionId, transactionDate,
-                    totalDebitAmount);
+
+        /**
+         * Single DEBIT transaction for write-offs or Repayments (and their
+         * reversals)
+         ***/
+        if (writeOff) {
+            helper.createDebitJournalEntryOrReversalForLoan(office, ACCRUAL_ACCOUNTS_FOR_LOAN.LOSSES_WRITTEN_OFF, loanProductId, loanId,
+                    transactionId, transactionDate, totalDebitAmount, isReversal);
         } else {
-            helper.createDebitJournalEntryForLoanProduct(office, fundSourceAccount, loanId, transactionId, transactionDate,
-                    totalDebitAmount);
+            helper.createDebitJournalEntryOrReversalForLoan(office, ACCRUAL_ACCOUNTS_FOR_LOAN.FUND_SOURCE, loanProductId, loanId,
+                    transactionId, transactionDate, totalDebitAmount, isReversal);
+        }
+    }
+
+    /**
+     * Create Journal Entries for application of charges (fees and payments)
+     * using the following rules <br/>
+     * 
+     * <b>Fees:</b> Debit <i>Fees Receivable</i> and credit <i>Income from
+     * Fees</i> <br/>
+     * 
+     * <b>Penalties:</b> Debit <i>Penalties Receivable</i> and credit <i>Income
+     * from Penalties</i>
+     * 
+     * Also handles reversals for both fees and payment applications
+     * 
+     * @param loanDTO
+     * @param loanTransactionDTO
+     * @param office
+     */
+    private void createJournalEntriesForApplyCharges(final LoanDTO loanDTO, final LoanTransactionDTO loanTransactionDTO, final Office office) {
+
+        // loan properties
+        final Long loanProductId = loanDTO.getLoanProductId();
+        final Long loanId = loanDTO.getLoanId();
+
+        // transaction properties
+        final String transactionId = loanTransactionDTO.getTransactionId();
+        final Date transactionDate = loanTransactionDTO.getTransactionDate();
+        final BigDecimal feesAmount = loanTransactionDTO.getFees();
+        final BigDecimal penaltiesAmount = loanTransactionDTO.getPenalties();
+        final boolean isReversed = loanTransactionDTO.isReversed();
+
+        // create journal entries for the fees application (or reversal)
+        if (feesAmount != null && !(feesAmount.compareTo(BigDecimal.ZERO) == 0)) {
+            helper.createAccrualBasedJournalEntriesAndReversalsForLoan(office, ACCRUAL_ACCOUNTS_FOR_LOAN.LOAN_PORTFOLIO,
+                    ACCRUAL_ACCOUNTS_FOR_LOAN.FUND_SOURCE, loanProductId, loanId, transactionId, transactionDate, feesAmount, isReversed);
+        }
+        // create journal entries for the penalties application (or reversal)
+        else if (penaltiesAmount != null && !(penaltiesAmount.compareTo(BigDecimal.ZERO) == 0)) {
+            helper.createAccrualBasedJournalEntriesAndReversalsForLoan(office, ACCRUAL_ACCOUNTS_FOR_LOAN.PENALTIES_RECEIVABLE,
+                    ACCRUAL_ACCOUNTS_FOR_LOAN.INCOME_FROM_PENALTIES, loanProductId, loanId, transactionId, transactionDate, feesAmount,
+                    isReversed);
         }
     }
 
diff --git a/mifosng-provider/src/main/java/org/mifosplatform/accounting/journalentry/service/CashBasedAccountingProcessorForLoan.java b/mifosng-provider/src/main/java/org/mifosplatform/accounting/journalentry/service/CashBasedAccountingProcessorForLoan.java
index 0779fb328..236c658a4 100755
--- a/mifosng-provider/src/main/java/org/mifosplatform/accounting/journalentry/service/CashBasedAccountingProcessorForLoan.java
+++ b/mifosng-provider/src/main/java/org/mifosplatform/accounting/journalentry/service/CashBasedAccountingProcessorForLoan.java
@@ -5,7 +5,6 @@ import java.util.Date;
 
 import org.mifosplatform.accounting.closure.domain.GLClosure;
 import org.mifosplatform.accounting.common.AccountingConstants.CASH_ACCOUNTS_FOR_LOAN;
-import org.mifosplatform.accounting.glaccount.domain.GLAccount;
 import org.mifosplatform.accounting.journalentry.data.LoanDTO;
 import org.mifosplatform.accounting.journalentry.data.LoanTransactionDTO;
 import org.mifosplatform.organisation.office.domain.Office;
@@ -53,15 +52,9 @@ public class CashBasedAccountingProcessorForLoan implements AccountingProcessorF
              **/
             else if (loanTransactionDTO.getTransactionType().isWriteOff() && !loanTransactionDTO.isReversed()) {
                 final BigDecimal principalAmount = loanTransactionDTO.getPrincipal();
-                final GLAccount lossesWrittenOffAccount = helper.getLinkedCashAccountsForLoanProduct(loanProductId,
-                        CASH_ACCOUNTS_FOR_LOAN.LOSSES_WRITTEN_OFF);
-                helper.createDebitJournalEntryForLoanProduct(office, lossesWrittenOffAccount, loanId, transactionId, transactionDate,
-                        principalAmount);
-
-                final GLAccount loanPortfolioAccount = helper.getLinkedCashAccountsForLoanProduct(loanProductId,
-                        CASH_ACCOUNTS_FOR_LOAN.LOAN_PORTFOLIO);
-                helper.createCreditJournalEntryForLoanProduct(office, loanPortfolioAccount, loanId, transactionId, transactionDate,
-                        principalAmount);
+                helper.createCashBasedJournalEntriesAndReversalsForLoan(office, CASH_ACCOUNTS_FOR_LOAN.LOSSES_WRITTEN_OFF,
+                        CASH_ACCOUNTS_FOR_LOAN.LOAN_PORTFOLIO, loanProductId, loanId, transactionId, transactionDate, principalAmount,
+                        false);
             }
         }
     }
@@ -87,22 +80,10 @@ public class CashBasedAccountingProcessorForLoan implements AccountingProcessorF
         final String transactionId = loanTransactionDTO.getTransactionId();
         final Date transactionDate = loanTransactionDTO.getTransactionDate();
         final BigDecimal disbursalAmount = loanTransactionDTO.getAmount();
-        final boolean isReversed = loanTransactionDTO.isReversed();
+        final boolean isReversal = loanTransactionDTO.isReversed();
 
-        final GLAccount loanPortfolioAccount = helper.getLinkedCashAccountsForLoanProduct(loanProductId,
-                CASH_ACCOUNTS_FOR_LOAN.LOAN_PORTFOLIO);
-        final GLAccount fundSourceAccount = helper.getLinkedCashAccountsForLoanProduct(loanProductId, CASH_ACCOUNTS_FOR_LOAN.FUND_SOURCE);
-        if (isReversed) {
-            helper.createDebitJournalEntryForLoanProduct(office, fundSourceAccount, loanId, transactionId, transactionDate, disbursalAmount);
-            helper.createCreditJournalEntryForLoanProduct(office, loanPortfolioAccount, loanId, transactionId, transactionDate,
-                    disbursalAmount);
-
-        } else {
-            helper.createDebitJournalEntryForLoanProduct(office, loanPortfolioAccount, loanId, transactionId, transactionDate,
-                    disbursalAmount);
-            helper.createCreditJournalEntryForLoanProduct(office, fundSourceAccount, loanId, transactionId, transactionDate,
-                    disbursalAmount);
-        }
+        helper.createCashBasedJournalEntriesAndReversalsForLoan(office, CASH_ACCOUNTS_FOR_LOAN.LOAN_PORTFOLIO,
+                CASH_ACCOUNTS_FOR_LOAN.FUND_SOURCE, loanProductId, loanId, transactionId, transactionDate, disbursalAmount, isReversal);
     }
 
     /**
@@ -132,63 +113,30 @@ public class CashBasedAccountingProcessorForLoan implements AccountingProcessorF
 
         if (principalAmount != null && !(principalAmount.compareTo(BigDecimal.ZERO) == 0)) {
             totalDebitAmount = totalDebitAmount.add(principalAmount);
-
-            final GLAccount loanPortfolioAccount = helper.getLinkedCashAccountsForLoanProduct(loanProductId,
-                    CASH_ACCOUNTS_FOR_LOAN.LOAN_PORTFOLIO);
-            if (isReversal) {
-                helper.createDebitJournalEntryForLoanProduct(office, loanPortfolioAccount, loanId, transactionId, transactionDate,
-                        principalAmount);
-            } else {
-                helper.createCreditJournalEntryForLoanProduct(office, loanPortfolioAccount, loanId, transactionId, transactionDate,
-                        principalAmount);
-            }
+            helper.createCreditJournalEntryOrReversalForLoan(office, CASH_ACCOUNTS_FOR_LOAN.LOAN_PORTFOLIO, loanProductId, loanId,
+                    transactionId, transactionDate, principalAmount, isReversal);
         }
+
         if (interestAmount != null && !(interestAmount.compareTo(BigDecimal.ZERO) == 0)) {
             totalDebitAmount = totalDebitAmount.add(interestAmount);
-
-            final GLAccount interestAccount = helper.getLinkedCashAccountsForLoanProduct(loanProductId,
-                    CASH_ACCOUNTS_FOR_LOAN.INTEREST_ON_LOANS);
-            if (isReversal) {
-                helper.createDebitJournalEntryForLoanProduct(office, interestAccount, loanId, transactionId, transactionDate,
-                        interestAmount);
-            } else {
-                helper.createCreditJournalEntryForLoanProduct(office, interestAccount, loanId, transactionId, transactionDate,
-                        interestAmount);
-            }
+            helper.createCreditJournalEntryOrReversalForLoan(office, CASH_ACCOUNTS_FOR_LOAN.INTEREST_ON_LOANS, loanProductId, loanId,
+                    transactionId, transactionDate, interestAmount, isReversal);
         }
+
         if (feesAmount != null && !(feesAmount.compareTo(BigDecimal.ZERO) == 0)) {
             totalDebitAmount = totalDebitAmount.add(feesAmount);
-
-            final GLAccount incomeFromFeesAccount = helper.getLinkedCashAccountsForLoanProduct(loanProductId,
-                    CASH_ACCOUNTS_FOR_LOAN.INCOME_FROM_FEES);
-            if (isReversal) {
-                helper.createDebitJournalEntryForLoanProduct(office, incomeFromFeesAccount, loanId, transactionId, transactionDate,
-                        feesAmount);
-            } else {
-                helper.createCreditJournalEntryForLoanProduct(office, incomeFromFeesAccount, loanId, transactionId, transactionDate,
-                        feesAmount);
-            }
+            helper.createCreditJournalEntryOrReversalForLoan(office, CASH_ACCOUNTS_FOR_LOAN.INCOME_FROM_FEES, loanProductId, loanId,
+                    transactionId, transactionDate, feesAmount, isReversal);
         }
+
         if (penaltiesAmount != null && !(penaltiesAmount.compareTo(BigDecimal.ZERO) == 0)) {
             totalDebitAmount = totalDebitAmount.add(penaltiesAmount);
+            helper.createCreditJournalEntryOrReversalForLoan(office, CASH_ACCOUNTS_FOR_LOAN.INCOME_FROM_PENALTIES, loanProductId, loanId,
+                    transactionId, transactionDate, penaltiesAmount, isReversal);
+        }
 
-            final GLAccount incomeFromPenaltiesAccount = helper.getLinkedCashAccountsForLoanProduct(loanProductId,
-                    CASH_ACCOUNTS_FOR_LOAN.INCOME_FROM_PENALTIES);
-            if (isReversal) {
-                helper.createDebitJournalEntryForLoanProduct(office, incomeFromPenaltiesAccount, loanId, transactionId, transactionDate,
-                        penaltiesAmount);
-            } else {
-                helper.createCreditJournalEntryForLoanProduct(office, incomeFromPenaltiesAccount, loanId, transactionId, transactionDate,
-                        penaltiesAmount);
-            }
-        }
-        final GLAccount fundSourceAccount = helper.getLinkedCashAccountsForLoanProduct(loanProductId, CASH_ACCOUNTS_FOR_LOAN.FUND_SOURCE);
-        if (isReversal) {
-            helper.createCreditJournalEntryForLoanProduct(office, fundSourceAccount, loanId, transactionId, transactionDate,
-                    totalDebitAmount);
-        } else {
-            helper.createDebitJournalEntryForLoanProduct(office, fundSourceAccount, loanId, transactionId, transactionDate,
-                    totalDebitAmount);
-        }
+        /*** create a single debit entry (or reversal) for the entire amount **/
+        helper.createDebitJournalEntryOrReversalForLoan(office, CASH_ACCOUNTS_FOR_LOAN.FUND_SOURCE, loanProductId, loanId, transactionId,
+                transactionDate, totalDebitAmount, isReversal);
     }
 }
diff --git a/mifosng-provider/src/main/java/org/mifosplatform/portfolio/loanaccount/data/LoanTransactionEnumData.java b/mifosng-provider/src/main/java/org/mifosplatform/portfolio/loanaccount/data/LoanTransactionEnumData.java
index 560611bd7..95e6c20d5 100644
--- a/mifosng-provider/src/main/java/org/mifosplatform/portfolio/loanaccount/data/LoanTransactionEnumData.java
+++ b/mifosng-provider/src/main/java/org/mifosplatform/portfolio/loanaccount/data/LoanTransactionEnumData.java
@@ -21,6 +21,7 @@ public class LoanTransactionEnumData {
     private final boolean contra;
     private final boolean waiveInterest;
     private final boolean waiveCharges;
+    private final boolean applyCharges;
     private final boolean writeOff;
     private final boolean recoveryRepayment;
 
@@ -34,6 +35,7 @@ public class LoanTransactionEnumData {
         this.contra = Long.valueOf(3).equals(this.id);
         this.waiveInterest = Long.valueOf(4).equals(this.id);
         this.waiveCharges = Long.valueOf(9).equals(this.id);
+        this.applyCharges = Long.valueOf(10).equals(this.id);
         this.writeOff = Long.valueOf(6).equals(this.id);
         this.recoveryRepayment = Long.valueOf(8).equals(this.id);
     }
@@ -70,4 +72,8 @@ public class LoanTransactionEnumData {
         return this.recoveryRepayment;
     }
 
+    public boolean isApplyCharges() {
+        return this.applyCharges;
+    }
+
 }
\ No newline at end of file
diff --git a/mifosng-provider/src/main/java/org/mifosplatform/portfolio/loanaccount/domain/Loan.java b/mifosng-provider/src/main/java/org/mifosplatform/portfolio/loanaccount/domain/Loan.java
index 6fd0dd243..61d288758 100644
--- a/mifosng-provider/src/main/java/org/mifosplatform/portfolio/loanaccount/domain/Loan.java
+++ b/mifosng-provider/src/main/java/org/mifosplatform/portfolio/loanaccount/domain/Loan.java
@@ -378,7 +378,8 @@ public class Loan extends AbstractPersistable<Long> {
         this.accountNumberRequiresAutoGeneration = accountNumberRequiresAutoGeneration;
     }
 
-    public void addLoanCharge(final LoanCharge loanCharge) {
+    public LoanTransaction addLoanCharge(final LoanCharge loanCharge, final List<Long> existingTransactionIds,
+            final List<Long> existingReversedTransactionIds) {
 
         validateLoanIsNotClosed(loanCharge);
 
@@ -420,6 +421,53 @@ public class Loan extends AbstractPersistable<Long> {
         }
 
         updateLoanSummaryDerivedFields();
+
+        existingTransactionIds.addAll(findExistingTransactionIds());
+        existingReversedTransactionIds.addAll(findExistingReversedTransactionIds());
+        final LoanTransaction applyLoanChargeTransaction = getChargeAppliedTransaction(loanCharge, null);
+
+        return applyLoanChargeTransaction;
+    }
+
+    /**
+     * Creates a loanTransaction for "Apply Charge Event" with transaction date
+     * set to "suppliedTransactionDate"
+     * 
+     * If "suppliedTransactionDate" is not passed Id, the transaction date is
+     * set to the loans due date if the due date is lesser than todays date. If
+     * not, the transaction date is set to todays date
+     * 
+     * @param loanCharge
+     * @param suppliedTransactionDate
+     * @return
+     */
+    private LoanTransaction getChargeAppliedTransaction(final LoanCharge loanCharge, LocalDate suppliedTransactionDate) {
+        final Money chargeAmount = loanCharge.getAmount(getCurrency());
+        Money feeCharges = chargeAmount;
+        Money penaltyCharges = Money.zero(loanCurrency());
+        if (loanCharge.isPenaltyCharge()) {
+            penaltyCharges = chargeAmount;
+            feeCharges = Money.zero(loanCurrency());
+        }
+
+        LocalDate transactionDate = null;
+
+        if (suppliedTransactionDate != null) {
+            transactionDate = suppliedTransactionDate;
+        } else {
+            transactionDate = loanCharge.getDueLocalDate();
+            LocalDate currentDate = DateUtils.getLocalDateOfTenant();
+
+            // if loan charge is to be applied on a future date, the loan
+            // transaction would show todays date as applied date
+            if (currentDate.isBefore(transactionDate)) {
+                transactionDate = currentDate;
+            }
+        }
+
+        final LoanTransaction applyLoanChargeTransaction = LoanTransaction.applyLoanCharge(this, chargeAmount, transactionDate, feeCharges,
+                penaltyCharges);
+        return applyLoanChargeTransaction;
     }
 
     private void validateLoanIsNotClosed(final LoanCharge loanCharge) {
@@ -542,10 +590,10 @@ public class Loan extends AbstractPersistable<Long> {
 
         changes.put("amount", amountWaived.getAmount());
 
-        Money feeChargesWaived = Money.of(loanCurrency(), loanCharge.amount());
+        Money feeChargesWaived = amountWaived;
         Money penaltyChargesWaived = Money.zero(loanCurrency());
         if (loanCharge.isPenaltyCharge()) {
-            penaltyChargesWaived = Money.of(loanCurrency(), loanCharge.amount());
+            penaltyChargesWaived = amountWaived;
             feeChargesWaived = Money.zero(loanCurrency());
         }
 
@@ -1244,9 +1292,17 @@ public class Loan extends AbstractPersistable<Long> {
             chargesPayment.updateLoan(this);
             this.loanTransactions.add(chargesPayment);
 
+            /**
+             * all Charges repaid at disbursal is marked as repaid and
+             * "APPLY Charge" transactions are created for all other fees (
+             * which are created during disbursal but not repaid)
+             **/
             for (LoanCharge charge : setOfLoanCharges()) {
                 if (charge.isDueAtDisbursement()) {
                     charge.markAsFullyPaid();
+                } else {
+                    LoanTransaction loanChargeAppliedTransaction = getChargeAppliedTransaction(charge, disbursedOn);
+                    this.loanTransactions.add(loanChargeAppliedTransaction);
                 }
             }
         }
@@ -1843,7 +1899,7 @@ public class Loan extends AbstractPersistable<Long> {
     public boolean isSubmittedOnDateAfter(final LocalDate compareDate) {
         return this.submittedOnDate == null ? false : (new LocalDate(submittedOnDate)).isAfter(compareDate);
     }
-    
+
     private LocalDate getSubmittedOnDate() {
         return (LocalDate) ObjectUtils.defaultIfNull(new LocalDate(this.submittedOnDate), null);
     }
@@ -2080,7 +2136,7 @@ public class Loan extends AbstractPersistable<Long> {
                 break;
             }
 
-            if (lastAssignmentRecordLatestEndDate == null){ 
+            if (lastAssignmentRecordLatestEndDate == null) {
                 lastAssignmentRecordLatestEndDate = historyRecord;
             } else if (historyRecord.isEndDateAfter(lastAssignmentRecordLatestEndDate.getEndDate())
                     && !historyRecord.isSameLoanOfficer(newLoanOfficer)) {
diff --git a/mifosng-provider/src/main/java/org/mifosplatform/portfolio/loanaccount/domain/LoanCharge.java b/mifosng-provider/src/main/java/org/mifosplatform/portfolio/loanaccount/domain/LoanCharge.java
index b383ca3be..454c8e937 100644
--- a/mifosng-provider/src/main/java/org/mifosplatform/portfolio/loanaccount/domain/LoanCharge.java
+++ b/mifosng-provider/src/main/java/org/mifosplatform/portfolio/loanaccount/domain/LoanCharge.java
@@ -466,7 +466,7 @@ public class LoanCharge extends AbstractPersistable<Long> {
         return Money.of(currency, this.amountPaid).plus(amountWaivedOrWrittenOff).isGreaterThanZero();
     }
 
-    private Money getAmount(final MonetaryCurrency currency) {
+    public Money getAmount(final MonetaryCurrency currency) {
         return Money.of(currency, this.amount);
     }
 
diff --git a/mifosng-provider/src/main/java/org/mifosplatform/portfolio/loanaccount/domain/LoanTransaction.java b/mifosng-provider/src/main/java/org/mifosplatform/portfolio/loanaccount/domain/LoanTransaction.java
index 3be66bb50..90037fc16 100644
--- a/mifosng-provider/src/main/java/org/mifosplatform/portfolio/loanaccount/domain/LoanTransaction.java
+++ b/mifosng-provider/src/main/java/org/mifosplatform/portfolio/loanaccount/domain/LoanTransaction.java
@@ -85,6 +85,14 @@ public final class LoanTransaction extends AbstractPersistable<Long> {
     public static LoanTransaction waiver(final Loan loan, final Money waived, final LocalDate waiveDate) {
         return new LoanTransaction(loan, LoanTransactionType.WAIVE_INTEREST, waived.getAmount(), waiveDate);
     }
+    
+    public static LoanTransaction applyLoanCharge(final Loan loan, final Money amount, final LocalDate applyDate,
+            final Money feeCharges, final Money penaltyCharges) {
+        LoanTransaction applyCharge = new LoanTransaction(loan, LoanTransactionType.APPLY_CHARGES, amount.getAmount(), applyDate);
+        applyCharge.updateChargesComponents(feeCharges, penaltyCharges);
+
+        return applyCharge;
+    }
 
     public static LoanTransaction waiveLoanCharge(final Loan loan, final Money waived, final LocalDate waiveDate,
             final Money feeChargesWaived, final Money penaltyChargesWaived) {
diff --git a/mifosng-provider/src/main/java/org/mifosplatform/portfolio/loanaccount/domain/LoanTransactionType.java b/mifosng-provider/src/main/java/org/mifosplatform/portfolio/loanaccount/domain/LoanTransactionType.java
index 62f6c3cad..1343fa6f7 100644
--- a/mifosng-provider/src/main/java/org/mifosplatform/portfolio/loanaccount/domain/LoanTransactionType.java
+++ b/mifosng-provider/src/main/java/org/mifosplatform/portfolio/loanaccount/domain/LoanTransactionType.java
@@ -13,13 +13,15 @@ public enum LoanTransactionType {
     CONTRA(3, "loanTransactionType.contra"), //
     WAIVE_INTEREST(4, "loanTransactionType.waiver"), //
     REPAYMENT_AT_DISBURSEMENT(5, "loanTransactionType.repaymentAtDisbursement"), //
-    WRITEOFF(6, "loanTransactionType.writeOff"), MARKED_FOR_RESCHEDULING(7, "loanTransactionType.marked.for.rescheduling"), //
+    WRITEOFF(6, "loanTransactionType.writeOff"), //
+    MARKED_FOR_RESCHEDULING(7, "loanTransactionType.marked.for.rescheduling"), //
     /**
      * This type of transactions is allowed on written-off loans where mfi still
      * attempts to recover payments from applicant after writing-off.
      */
     RECOVERY_REPAYMENT(8, "loanTransactionType.recoveryRepayment"), //
-    WAIVE_CHARGES(9, "loanTransactionType.waiveCharges");
+    WAIVE_CHARGES(9, "loanTransactionType.waiveCharges"), //
+    APPLY_CHARGES(10, "loanTransactionType.applyCharges");
 
     private final Integer value;
     private final String code;
@@ -70,6 +72,9 @@ public enum LoanTransactionType {
             case 9:
                 loanTransactionType = LoanTransactionType.WAIVE_CHARGES;
             break;
+            case 10:
+                loanTransactionType = LoanTransactionType.APPLY_CHARGES;
+            break;
             default:
                 loanTransactionType = LoanTransactionType.INVALID;
             break;
@@ -101,6 +106,10 @@ public enum LoanTransactionType {
         return this.value.equals(LoanTransactionType.WAIVE_CHARGES.getValue());
     }
 
+    public boolean isApplyCharges() {
+        return this.value.equals(LoanTransactionType.APPLY_CHARGES.getValue());
+    }
+
     public boolean isWriteOff() {
         return this.value.equals(LoanTransactionType.WRITEOFF.getValue());
     }
diff --git a/mifosng-provider/src/main/java/org/mifosplatform/portfolio/loanaccount/service/LoanWritePlatformServiceJpaRepositoryImpl.java b/mifosng-provider/src/main/java/org/mifosplatform/portfolio/loanaccount/service/LoanWritePlatformServiceJpaRepositoryImpl.java
index ec68ed406..724ec2e77 100644
--- a/mifosng-provider/src/main/java/org/mifosplatform/portfolio/loanaccount/service/LoanWritePlatformServiceJpaRepositoryImpl.java
+++ b/mifosng-provider/src/main/java/org/mifosplatform/portfolio/loanaccount/service/LoanWritePlatformServiceJpaRepositoryImpl.java
@@ -489,11 +489,25 @@ public class LoanWritePlatformServiceJpaRepositoryImpl implements LoanWritePlatf
             throw new InvalidCurrencyException("loanCharge", "attach.to.loan", errorMessage);
         }
 
+        final List<Long> existingTransactionIds = new ArrayList<Long>();
+        final List<Long> existingReversedTransactionIds = new ArrayList<Long>();
         this.loanChargeRepository.save(loanCharge);
 
-        loan.addLoanCharge(loanCharge);
+        LoanTransaction applyChargeTransaction = loan.addLoanCharge(loanCharge, existingTransactionIds, existingReversedTransactionIds);
+
+        // we want to apply charge transactions only for those loans charges
+        // that are applied when a loan is active
+        if (loan.status().isActive()) {
+            this.loanTransactionRepository.save(applyChargeTransaction);
+        }
+
         this.loanRepository.save(loan);
 
+        // we post Journal entries only for loans in active status
+        if (loan.status().isActive()) {
+            postJournalEntries(loan, existingTransactionIds, existingReversedTransactionIds);
+        }
+
         return new CommandProcessingResultBuilder() //
                 .withCommandId(command.commandId()) //
                 .withEntityId(loanCharge.getId()) //
diff --git a/mifosng-provider/src/main/java/org/mifosplatform/portfolio/loanproduct/service/LoanEnumerations.java b/mifosng-provider/src/main/java/org/mifosplatform/portfolio/loanproduct/service/LoanEnumerations.java
index ebe19ab67..93df32e6a 100644
--- a/mifosng-provider/src/main/java/org/mifosplatform/portfolio/loanproduct/service/LoanEnumerations.java
+++ b/mifosng-provider/src/main/java/org/mifosplatform/portfolio/loanproduct/service/LoanEnumerations.java
@@ -206,8 +206,7 @@ public class LoanEnumerations {
         switch (type) {
             case INVALID:
                 optionData = new LoanTransactionEnumData(LoanTransactionType.INVALID.getValue().longValue(),
-                        LoanTransactionType.INVALID.getCode(),
-                        "Invalid");
+                        LoanTransactionType.INVALID.getCode(), "Invalid");
             break;
             case DISBURSEMENT:
                 optionData = new LoanTransactionEnumData(LoanTransactionType.DISBURSEMENT.getValue().longValue(),
@@ -223,8 +222,7 @@ public class LoanEnumerations {
             break;
             case CONTRA:
                 optionData = new LoanTransactionEnumData(LoanTransactionType.CONTRA.getValue().longValue(),
-                        LoanTransactionType.CONTRA.getCode(),
-                        "Reversal");
+                        LoanTransactionType.CONTRA.getCode(), "Reversal");
             break;
             case WAIVE_INTEREST:
                 optionData = new LoanTransactionEnumData(LoanTransactionType.WAIVE_INTEREST.getValue().longValue(),
@@ -246,6 +244,10 @@ public class LoanEnumerations {
                 optionData = new LoanTransactionEnumData(LoanTransactionType.WAIVE_CHARGES.getValue().longValue(),
                         LoanTransactionType.WAIVE_CHARGES.getCode(), "Waive loan charges");
             break;
+            case APPLY_CHARGES:
+                optionData = new LoanTransactionEnumData(LoanTransactionType.APPLY_CHARGES.getValue().longValue(),
+                        LoanTransactionType.APPLY_CHARGES.getCode(), "Apply Charge");
+            break;
         }
         return optionData;
     }