 we're going to make the first payment on 315, the middle of the second month. So let's say the payment's going to be this amount. The interest that we're going to calculate will be equal to 5,000 times 35%. But that would be for the entire year. This is just one month. So I'm going to take that and divide the whole thing by two. I don't need any brackets or anything because order of operations should be okay with multiplication division. So that comes out to that. That's not what I expected it to come out to. So I divided it by two, not 12. Double click. This should be a 12, not a two. Alright, then we're going to say the reduction to the loan is going to be this amount, the payment minus the interest. So in other words, I'm going to pay this amount each time. The interest is like the rent on the purchasing power of the money. It's going to go away. I'm not going to get a loan reduction for that. And then that means that this amount is the amount that's actually going to reduce the loan balance. Here's the loan balance. You can also call it loan principle, loan reduction in principle, but I always spell principle wrong like it's the principle of the school. And then people make fun of me because my spelling didn't work right. And then so I avoid that by saying loan reduction. And then sometimes I spell loan wrong. And people make fun of me. But whatever. So in any case, let's make let's double click on this and make this an absolute reference saying F4. This is dollar sign B dollar sign for and that means that when I copy it down, it's not going to move this sale down. So I'm going to copy that because the payments going to be the same each time across the interest. However, if I double click on that, that when I copy it down, I want this sale to move, which it will. I don't want this cell to move. Therefore, I need to make that absolute, that cell B4, B4. What? No, that's B3, B3. So I'm going to F2 on that one or F4. I'm in there. I select F4 where you can put a dollar sign before the B and three. You only need a mixed reference, but an absolute one is easier to think about. I can copy that one down. And then this one is doing what we want because these two cells, I want them both to move down when I copy it down. So I'm just going to auto fill that one down. This one is also going to do what we want because I want these two cells to move down. Notice the only time it really doesn't do what I want usually is if I have a cell that's coming from my data set over here on the left hand side. Okay, so let's copy that down. And then I should get to zero. That's my indication that my amortization table is correct. Alright, so if I then put some brackets around this thing, there it is. It's perfect. It's perfect. Let's go to our C column home tab and format paint another eye column, a skinny eye column over here. And then we're going to say that we're going to use this and say, well, now at this point in time, notice that these loans are happening in the middle of the month. So right here, I'm going to I'm going to pay the next payment on March 15, but the cutoff date is 228 into February. That means that there's been 15 days that happened in February before I make the payment in March. So that means that basically half of the interest related to that should be incurred in February instead of March. Now, so that would be this number divided by two. Now that's a pretty small number. So it might be in material and not really necessary to make an adjusting entry to, but just remember that that's the concept. That's the idea. So you could have a loan structure that's not in installment purposes, not paid off each month, or with the loan amount could be a lot larger in which case, the kind of adjusting entry could be a lot larger. But that's the principle behind it. So what do we need to do? Well, that interest then needs to be recorded before February. It needs to be pulled into February. It's a timing difference, a classic adjusting entry. So the adjusting entry is going to be interest expense. I'm going to make this a little bit larger debit. And if I was to think of this in terms of debits and credits, I'm going to say debit credit. And we have to basically think in terms of debits and credits with adjusting entries, there's really no way around it. But with the smaller ones, even if you don't really understand debits and credits, you can still kind of reason around why it's a debit and a credit and kind of finagle it and see which debit or credit increases any particular account. All right. And the other side's going to go into, I'm going to call it interest payable. You might also call it accrued interest. It's a liability either way. I like using payable because I think that to me is a clearer indication that it's a liability. It's a payable type of account. So there it is. Now, so that will pull that $72 of interest before the cutoff date so that we can record the expense as of the point in time that we're reporting our financial statements. Now notice that you might say, but wait a second, if I leave that there, then it's going to kind of mess up my normal reporting by the bookkeeper because the bookkeeper is going to want to report according to this amortization schedule. So they are usually going to report as of 315. They're going to want to say interest expense of this amount and then the loan reduction or let's just say loan account should go down by this and then the payment or cash, let's say, would be the negative sum of that, negative sum of that, where I got my loan reduction backwards. This should be a debit and not negative. Okay, so and then this ties out to that. So notice that this entry will mess up the normal journal entry for the account. So you might then say, well maybe I'll reverse that. So this is one that we might do a reversing entry for possibly. We don't really have to. We could kind of leave it there and then do another adjusting entry, but we'll do a reversing entry and we'll talk more about that in a future presentation. For now though, let's just record this amount. So let's put some brackets around it. We're going to do that with a standard, just a journal entry. So I'm going to go over here and go to the first tab and our journal entries, we find them in zero by going to the accounting drop down reports. And then we're going to say this is going to be a journal report. And then within the journal report, we have our ad journal. That's what we want to do. Add a journal, their narration. I'm just going to say this is an adjusting entry. You might put more than that, but I want to be able to indicate that this is an adjusting entry specifically so that whoever's looking at this entry can see that it's not part of the normal day-to-day accounting process, but rather the month end or year end adjusting entry process, which they can tell by the fact that one, it's a journal entry. Two, I specify that it's an adjusting entry. And three, the date is always going to be at the end of the period. So I'm going to go here and say that this is going to be the end of Feb, Feb 28. Feb 28. Now, zero has this really neat reversing thing here that says, Hey, if it's a reversing entry, we will do it for you. We'll just reverse it as if so you can set it to reverse it. Again, I don't think that's in other software like QuickBooks Online, and that could be a nice useful tool. I'm going to go back in and do the reversing entry later, just so you can see why you would do a reversing entry and win. But we might touch on that just so we can see it, we can see it in a future presentation. So narrative, good show journal on cash basis. Okay. And then this is going to be the account is going to be a debit to interest expense. And then it's for the amount of $72.92, $72.92. And the credit adjusting entry is going to go to loan. This which which loan was it? The B of A, I think let's double check it. B of A loan the $5,000 one.