Cash payments and checks
Objective: Record cash payments and identify what each pays for.
Recommended first: Recording expenses and payments
Each payment needs a document: a bill, receipt, payroll record, or loan schedule. Reference the check or transfer number so the bank reconciliation can match it later.
- Pay a recorded bill → Dr Accounts Payable.
- Pay a current expense → Dr the expense.
- Pay loan principal → Dr Notes Payable; interest → Dr Interest Expense.
Good payment practice includes approval before payment, matching to the bill, and recording the check or transfer number. These steps make the bank reconciliation straightforward and reduce the risk of paying the same bill twice. For loan payments, use the lender's schedule to split principal from interest.
Check your work
- Is the payment matched to an approved bill or a current expense?
- Is the reference number recorded?
- For loans, is interest separated from principal?
Check #301 pays March rent of $1,200.
| Account | Debit | Credit |
|---|---|---|
| Rent Expense | $1,200.00 | |
| Cash | $1,200.00 |
Common mistakes
✗ Not recording the check number.
✓ Without it, matching to the bank statement is harder.
Guided practice
Use hints freely here.
Item 1 of 1
Pay this month's rent
On Mar 5, 2026, Peak Form Fitness Studio pays $900.00 rent for the current month by check #301.
Independent practice
Try these without hints. Completing the lesson needs at least one independent item solved without revealing the answer.
Item 1 of 4
Loan payment with interest
On Mar 15, 2026, Rise & Shine Bakery makes a $1,226.00 loan payment: $1,100.00 principal and $126.00 interest.
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References and provenance
- OpenStax, Principles of Accounting, Volume 1: Financial Accounting (accessed 2026-10-29)
Original lesson written for Bookkeeping Exercises (AI-assisted drafting). Calculations are verified by the platform's automated accounting tests. Not yet reviewed by a credentialed accountant. Updated 2026-10-29.