All right, transaction eight. The company made its payment to the national bank for $14,000. $10,00 of that was repayment of the principal. Recall that when they took out the loan they were going to make a $10,000 payment on the principal each year at the end of the year. And then 4,000 of the $14,000 payment was the payment for interest. So let's record the transaction. Let's start with the easy part. We know that we made a payment of $14,000, so let's just record that as a right hand side to cash. Cash goes down by $14,000. Now let's think about what the corresponding left hand entries might be. 10,000 of that $14,000 payment was a repayment of the loan principal. So remember we have this loan here that we took out for $40,000. And this payment is repaying 10,000 of that. So our liability or our loan amount, loan principal, goes down by $10,000. So let's record that reduction in our loan payable liability account As a left-hand side entry or a debit. It's a liability account. Its balance goes down. So that's the left-hand side. And then we have an additional $4,000 that we must record in order to get these total of the left-hand side equal to the total of the right-hand side in the journal entry. So these must be equal. They currently are not. So there must be a $4,000 entry here on the left side, in order for this journal entry, to have the left hand totals equivalent to the right hand totals. So let's contemplate what that might be. That $4,000 was for the payment of interest. Interest is a cost that the company has incurred in the current period. And in an effort to help generate some revenues. So in that case, what we need to record is an expense. It's a cost that was incurred in the period to generate benefit, or to help us generate revenues. Okay, so let's record the expense to retained earnings., Which is an owner's equity account of course. We'll put the notation, interest, expense, and now it reduces retained earnings. Which of course is why it's a left hand side entry. Now, let's post to the T account. We have a left hand side entry to the loan payable account. But that on the left side, make a notation that it's transaction A. We have a left side entry to the retained earnings T account. For $4,000, make a note that that's transaction eight. And we also would like to make a note that this is associated with interest expense. And then we have a right-hand side entry to cash, so let's put that on the right side of the cash T account. Denote that it's associated with transaction eight. Do assets still equal to liabilities plus owner's equity? Well let's check. Cash goes down by $14,000. The balance of the loan payable account goes down by $10,000. So liabilities are reduced and retained earnings is reduced by the $4,000 interest expense. So that's a reduction to owner's equity. So we see that the net effect of the change in the right side of the equation is a negative $14,000 and the change in the left side of the equation is a negative $14,000. Both sides of the equation down by $14,000. We stay in balancing, guess what? So this is where we stand after recording transactions one through eight for the garden spot.