Correct anser: Thanks I recalculated to be sure. Using a monthly rate of 8%/12 = 0.0066666667, the exact math gives: Monthly payment (exact) = $1,213.2759435535777 $1,213.28 (rounded to cents) Interest for 1st month = $100,000 0.0066666667 = $666.6666667 $666.67 (rounded) Principal = Payment Interest = 1,213.27594355 666.6666667 = $546.6092769 $546.61 (rounded) Correct journal entry for the first monthly payment Debit Interest Expense ...... $666.67 Debit Notes Payable (principal) ... $546.61 Credit Cash .................................... $1,213.28 Rounding note: accountants usually round each line to the nearest cent; that produces the numbers above. If your system truncated or rounded differently (for example rounding intermediate values down), you may see slightly different cents (like $546.59 / $1,213.26), but the standard rounded-to-cents entry is what I showed