diff --git a/mifosng-provider/src/integrationTest/java/org/mifosplatform/integrationtests/AccountingScenarioIntegrationTest.java b/mifosng-provider/src/integrationTest/java/org/mifosplatform/integrationtests/AccountingScenarioIntegrationTest.java
index cf81e07a8..0b3f75df1 100644
--- a/mifosng-provider/src/integrationTest/java/org/mifosplatform/integrationtests/AccountingScenarioIntegrationTest.java
+++ b/mifosng-provider/src/integrationTest/java/org/mifosplatform/integrationtests/AccountingScenarioIntegrationTest.java
@@ -658,6 +658,64 @@ public class AccountingScenarioIntegrationTest {
         System.out.println("Repayment 5 Done  ......");
     }
 
+    @Test
+    public void checkPeriodicAccrualAccountingFlow_OVER_PAYMENT() {
+        final Account assetAccount = this.accountHelper.createAssetAccount();
+        final Account incomeAccount = this.accountHelper.createIncomeAccount();
+        final Account expenseAccount = this.accountHelper.createExpenseAccount();
+        final Account overpaymentAccount = this.accountHelper.createLiabilityAccount();
+
+        final Integer loanProductID = createLoanProductWithPeriodicAccrualAccountingEnabled(assetAccount, incomeAccount, expenseAccount,
+                overpaymentAccount);
+
+        final Integer clientID = ClientHelper.createClient(this.requestSpec, this.responseSpec, this.DATE_OF_JOINING);
+        final Integer loanID = applyForLoanApplication(clientID, loanProductID);
+
+        HashMap loanStatusHashMap = LoanStatusChecker.getStatusOfLoan(this.requestSpec, this.responseSpec, loanID);
+        LoanStatusChecker.verifyLoanIsPending(loanStatusHashMap);
+
+        loanStatusHashMap = this.loanTransactionHelper.approveLoan(this.EXPECTED_DISBURSAL_DATE, loanID);
+        LoanStatusChecker.verifyLoanIsApproved(loanStatusHashMap);
+        LoanStatusChecker.verifyLoanIsWaitingForDisbursal(loanStatusHashMap);
+
+        loanStatusHashMap = this.loanTransactionHelper.disburseLoan(this.EXPECTED_DISBURSAL_DATE, loanID);
+        LoanStatusChecker.verifyLoanIsActive(loanStatusHashMap);
+
+        // CHECK ACCOUNT ENTRIES
+        System.out.println("Entries ......");
+        final float PRINCIPAL_VALUE_FOR_EACH_PERIOD = 2000.0f;
+        final float TOTAL_INTEREST = 1000.0f;
+        final JournalEntry[] assetAccountInitialEntry = { new JournalEntry(this.LP_PRINCIPAL, JournalEntry.TransactionType.CREDIT),
+                new JournalEntry(this.LP_PRINCIPAL, JournalEntry.TransactionType.DEBIT), };
+        this.journalEntryHelper.checkJournalEntryForAssetAccount(assetAccount, this.EXPECTED_DISBURSAL_DATE, assetAccountInitialEntry);
+
+        final String jobName = "Add Accrual Transactions";
+        try {
+            this.schedulerJobHelper.executeJob(jobName);
+        } catch (InterruptedException e) {
+            e.printStackTrace();
+        }
+
+        // MAKE 1
+        System.out.println("Repayment 1 ......");
+        final float FIRST_INTEREST = 200.0f;
+        final float FIRST_PRINCIPAL = 2000.0f;
+        final float FEE_PORTION = 0.0f;
+        final float PENALTY_PORTION = 0.0f;
+        this.loanTransactionHelper.checkAccrualTransactionForRepayment(getDateAsLocalDate(this.REPAYMENT_DATE[1]), FIRST_INTEREST,
+                FEE_PORTION, PENALTY_PORTION, loanID);
+        this.loanTransactionHelper.makeRepayment(this.REPAYMENT_DATE[1], 15000f, loanID);
+        float expected_value = this.LP_PRINCIPAL - PRINCIPAL_VALUE_FOR_EACH_PERIOD;
+        this.loanTransactionHelper.verifyRepaymentScheduleEntryFor(1, expected_value, loanID);
+        final JournalEntry[] assetAccountEntry = { new JournalEntry(15000f, JournalEntry.TransactionType.DEBIT),
+                new JournalEntry(1000f, JournalEntry.TransactionType.CREDIT), new JournalEntry(10000f, JournalEntry.TransactionType.CREDIT) };
+        this.journalEntryHelper.checkJournalEntryForAssetAccount(assetAccount, this.REPAYMENT_DATE[1], assetAccountEntry);
+        this.journalEntryHelper.checkJournalEntryForLiabilityAccount(overpaymentAccount, this.REPAYMENT_DATE[1], new JournalEntry(4000f,
+                JournalEntry.TransactionType.CREDIT));
+        System.out.println("Repayment  Done......");
+
+    }
+
     @Test
     public void checkPeriodicAccrualAccountingTillCurrentDateFlow() {
         final Account assetAccount = this.accountHelper.createAssetAccount();
diff --git a/mifosng-provider/src/integrationTest/java/org/mifosplatform/integrationtests/ClientLoanIntegrationTest.java b/mifosng-provider/src/integrationTest/java/org/mifosplatform/integrationtests/ClientLoanIntegrationTest.java
index d4c29f4de..46e063c76 100644
--- a/mifosng-provider/src/integrationTest/java/org/mifosplatform/integrationtests/ClientLoanIntegrationTest.java
+++ b/mifosng-provider/src/integrationTest/java/org/mifosplatform/integrationtests/ClientLoanIntegrationTest.java
@@ -1953,8 +1953,10 @@ public class ClientLoanIntegrationTest {
         System.out.println("----------Make over payment for repayment 4 ------------");
         this.loanTransactionHelper.makeRepayment("20 January 2012", Float.valueOf("3220.60"), loanID);
         this.journalEntryHelper.checkJournalEntryForAssetAccount(assetAccount, "20 January 2012", new JournalEntry(
-                Float.valueOf("3139.68"), JournalEntry.TransactionType.DEBIT), new JournalEntry(Float.valueOf("50.00"),
+                Float.valueOf("3220.60"), JournalEntry.TransactionType.DEBIT), new JournalEntry(Float.valueOf("50.00"),
                 JournalEntry.TransactionType.CREDIT), new JournalEntry(Float.valueOf("3089.68"), JournalEntry.TransactionType.CREDIT));
+        this.journalEntryHelper.checkJournalEntryForLiabilityAccount(overpaymentAccount, "20 January 2012", new JournalEntry(80.92f,
+                JournalEntry.TransactionType.CREDIT));
         loanStatusHashMap = (HashMap) this.loanTransactionHelper.getLoanDetail(this.requestSpec, this.responseSpec, loanID, "status");
         LoanStatusChecker.verifyLoanAccountIsOverPaid(loanStatusHashMap);
     }
@@ -2147,8 +2149,10 @@ public class ClientLoanIntegrationTest {
         System.out.println("----------Make over payment for repayment 4 ------------");
         this.loanTransactionHelper.makeRepayment("20 January 2012", Float.valueOf("3220.58"), loanID);
         this.journalEntryHelper.checkJournalEntryForAssetAccount(assetAccount, "20 January 2012", new JournalEntry(
-                Float.valueOf("3120.58"), JournalEntry.TransactionType.DEBIT), new JournalEntry(Float.valueOf("30.90"),
+                Float.valueOf("3220.58"), JournalEntry.TransactionType.DEBIT), new JournalEntry(Float.valueOf("30.90"),
                 JournalEntry.TransactionType.CREDIT), new JournalEntry(Float.valueOf("3089.68"), JournalEntry.TransactionType.CREDIT));
+        this.journalEntryHelper.checkJournalEntryForLiabilityAccount(overpaymentAccount, "20 January 2012", new JournalEntry(100f,
+                JournalEntry.TransactionType.CREDIT));
         loanStatusHashMap = (HashMap) this.loanTransactionHelper.getLoanDetail(this.requestSpec, this.responseSpec, loanID, "status");
         LoanStatusChecker.verifyLoanAccountIsOverPaid(loanStatusHashMap);
     }
@@ -2356,8 +2360,10 @@ public class ClientLoanIntegrationTest {
         System.out.println("----------Make over payment for repayment 4 ------------");
         this.loanTransactionHelper.makeRepayment("20 January 2012", Float.valueOf("3221.61"), loanID);
         this.journalEntryHelper.checkJournalEntryForAssetAccount(assetAccount, "20 January 2012", new JournalEntry(
-                Float.valueOf("3121.19"), JournalEntry.TransactionType.DEBIT), new JournalEntry(Float.valueOf("31.51"),
+                Float.valueOf("3221.61"), JournalEntry.TransactionType.DEBIT), new JournalEntry(Float.valueOf("31.51"),
                 JournalEntry.TransactionType.CREDIT), new JournalEntry(Float.valueOf("3089.68"), JournalEntry.TransactionType.CREDIT));
+        this.journalEntryHelper.checkJournalEntryForLiabilityAccount(overpaymentAccount, "20 January 2012", new JournalEntry(100.42f,
+                JournalEntry.TransactionType.CREDIT));
         loanStatusHashMap = (HashMap) this.loanTransactionHelper.getLoanDetail(this.requestSpec, this.responseSpec, loanID, "status");
         LoanStatusChecker.verifyLoanAccountIsOverPaid(loanStatusHashMap);
     }
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 104af8f42..ea6298ec2 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
@@ -174,6 +174,7 @@ public class AccrualBasedAccountingProcessorForLoan implements AccountingProcess
         final BigDecimal interestAmount = loanTransactionDTO.getInterest();
         final BigDecimal feesAmount = loanTransactionDTO.getFees();
         final BigDecimal penaltiesAmount = loanTransactionDTO.getPenalties();
+        final BigDecimal overPaymentAmount = loanTransactionDTO.getOverPayment();
         final Long paymentTypeId = loanTransactionDTO.getPaymentTypeId();
         final boolean isReversal = loanTransactionDTO.isReversed();
 
@@ -219,6 +220,12 @@ public class AccrualBasedAccountingProcessorForLoan implements AccountingProcess
                         loanProductId, paymentTypeId, loanId, transactionId, transactionDate, penaltiesAmount, isReversal);
             }
         }
+        
+        if (overPaymentAmount != null && !(overPaymentAmount.compareTo(BigDecimal.ZERO) == 0)) {
+            totalDebitAmount = totalDebitAmount.add(overPaymentAmount);
+            this.helper.createCreditJournalEntryOrReversalForLoan(office, currencyCode, ACCRUAL_ACCOUNTS_FOR_LOAN.OVERPAYMENT, loanProductId,
+                    paymentTypeId, loanId, transactionId, transactionDate, overPaymentAmount, isReversal);
+        }
 
         /**
          * Single DEBIT transaction for write-offs or Repayments (and their