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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.