The Loan (principal) should be sitting as a credit balance in your Balance Sheet under liabilities. When you repay those monthly, you should be Debiting (reducing) the Liabilities. However, the Interest on the loan would be a Debit to the Interest Expense in your P LDr Loan liability 850Dr loan interest 150 Cr. Bank 1,000
Well those payments are certainly not part of the profit are they!!Where else would they go?
