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January 19, 2009

How do I record a loan payment which includes paying both interest and principal?

Recording a loan payment which contains both interest and principal payments will involve a debit to Interest Expense, a debit to Loan Payable, and a credit to Cash.

The credit balance in your liability account Loan Payable should agree with the principal balance on your lender’s records. You can confirm that your balance in Loan Payable is correct by comparing it to the loan balance shown on the loan statement furnished by your lender. If such a statement is not provided, you can phone your lender and ask for the principal balance on your loan.

the accounting coach

About the Author: Harold Averkamp (CPA) has worked as an accountant, consultant, and university accounting instructor for more than 25 years.

He is the author of the 2010 Master Accounting Download Package which has been praised for it's ability to simplify accounting in a way that anybody can understand.



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Comments

2 Responses to “How do I record a loan payment which includes paying both interest and principal?”

  1. Srosh on January 20th, 2009 4:35 am

    i need notes of accounting n i dont have any money to pay for u r company i promiss whin i got job i will pay to u r ORG ?

  2. Naddy on May 23rd, 2009 3:15 am

    Ok! What’s the guarantee will you pay my debt as you get the job?

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