 In this presentation, we will take a look at the financial statements concentrated in on the balance sheet and the current and long term portion of notes payable or loans payable. Support accounting instruction by clicking the link below, giving you a free month membership to all of the content on our website broken out by category, further broken out by course. Each course then organized in a logical reasonable fashion, making it much more easy to find what you need than can be done on a YouTube page. We also include added resources such as Excel practice problems, PDF files and more like QuickBooks backup files when applicable. So once again, click the link below for a free month membership to our website and all the content on it. We take a look at what we have here. We're going to enter the information into our journal entry to break out the short term and long term portion of the loans payable. Then we're going to use the trial balance to create the financial statements, the trial balance being in a plus and minus format, just a quick trial balance to show us how this balancing option would look focusing in on the liabilities and these notes, because we need to break out this note payable between a short term and a long term portion. The difference being that the short term is going to be something do within a year, the long term being something that's going to be due after a year and we make monthly payments. So we're going to have to break this out. A couple different options we could do to do that. We could just keep everything in one account over here on the trial balance and then break it out on the financial statements with the use of some types of schedules. The other way we can do it is we could try to say, hey, I would like, like if I'm using QuickBooks or something, I don't want to have to do the financial statements outside of QuickBooks possibly. Maybe we can set it up so that the system has a short term and long term account and then the system can just generate the reports for us without us having to break them out differently. In order to do that, we would need the trial balance to be exactly the same format as what we want the financial statements to be. We would have to have a short term and long term portion. So what we're going to do here, we have multiple loans, however. So another option we could have is to have multiple accounts for multiple loans. But if we do that again, we probably don't want to have different loan amounts on the financial statements. We just want a number saying here's what is owed from short term to long term. So to do that, even though we have multiple loans, we just want basically two accounts that we can then support with some other type of backup data, the amortization tables. So if we go to the left, we see our amortization tables. So here's our two loans we have. And this green mark represents where we are at at this point in time as of the cutoff date. So the cutoff date of the financial statements, this is where we where we are at what we owe. This is what we are at. This is what we owe for the second loan. So these are the loan numbers. This is the information we have. We need to break out the short term and long term portion. Now, right now, this and this, I'm holding down control and clicking on this and this adds up to 128, 767. And that of course is what's currently in short term. What we need to do is break that out between the short term and long term portions. Now it's never going to be perfect. We can't make the payments perfect to break out between short term and long term as we make payments because it'll always differ. So it's impossible for us to make these payments and break out short term and long term because the short term and long term portions will differ all the time. So if this is a format we use, we're going to have to fix it every, every adjusting entry every month or whenever we make the financial statements to break out between short term and long term portion. So that's what we'll do now. We're going to go through here and try to break this out. And to do that, we're just going to say, again, we're going to say, what's the current portion? You can't add up just the payments. Those will be 12 payments we're going to make. But that doesn't work because we haven't incurred this interest yet. So remember that we have to pick up just the principal payments. So if we add up the principal, it adds up to 3182. Here's the current portion. So it's all the principal payments. So in other words, this is where we are at 12 payments later. Just the principal portion gives us this amount. Or this is where we are at 12 payments later. This is what we will still owe. The difference between the 92655 and the 61573 is the short term portion, just the portion that is principal. If we go to the second loan, this is where we are at on the second loan. As of the cutoff date, this is what we owe as of the date of the financial statements on this loan. 12 payments out for just the principal portion would be this plus this plus this 12 payments out or 7100. Here's the 7100, which could also be calculated as if this is where we are at right now, this is where we will be at and still owe after 12 months. The difference between the 36112 and the 2912 is the 7100. So this and this will be the current portion. This and this will be the long term portion. So if we break that out then between our two loans and our little worksheet here, we're going to say the short term portion is going to equal this amount for the first loan and it's going to equal this amount for the second loan. So if we sum it up then the short term portion will be 38182. The long term portion is going to be this amount for the first loan and equals this amount for the second loan and if we sum those up we get to 90,585 for our total which equals the short term plus the long term that's 128,767 which is this I'm holding down control and this that's where we are now 128,787. So in other words if we go up to here in our trial balance now we have it all in short term because we're just tracking it we're just making the payments from one account and now we've got to basically break this out between short term and long term according to our hour worksheet here. So this has the short term portion in it and we need to break it out so we're going to reduce this amount this is a credit we're going to make it go down doing the opposite thing to it a debit. So I'm going to right click and copy we'll put that on top 03 right click and paste 123. The amount that we're going to debit is going to be for the long term portion 90,585. So we could say this equals this 90,585 that's what we're going to take out of the total here in the short term and then we're going to put it into the long term credit negative of this number it's going to go into this long term portion so I'm going to right click and copy the long term put that in 04 right click and paste 123. Home tab alignment increase indenting. Now we'll post this here's the short term portion here's the short term portion on the trial balance we are in U6 equals pointing to that 90,585 bringing this down to the 38182 that matches now our worksheet then we're going to go to the long term portion here it is here here it is on our worksheet U7 equals this 90,585 and that of course the long term now matches our worksheet. Now the problem with this of course is that it doesn't match the amortization tables when we make payments on the amortization table we can see this now because we just put this number here but once we make the next payment the short term and long term portion will be all out of whack so that's kind of the problem so we have to fix it every time so what we might do what you might want to do is make this adjustment at the end of each time period and then put it back into one account as of the beginning of the next time period so every time you break it out it'll just be out of you'll have this account being the full amount and then a zero in the other account and you can break it out otherwise you're going to have kind of a these these numbers will not tie out to anything you'll have to add them up to match up what the total balance is and then break it out in some way so that that's the pros and the cons the good thing is now that we have these broken out if it was in a system like QuickBooks or something QuickBooks would just take this and and build it build it out without us having to do any adjustments outside of QuickBooks in other words QuickBooks can just take these amounts and say here's the current portion or whatever accounting system we're using and I'm going to say is negative of this number and here's the long term portion is negative of that number and that should put us back in balance so we can take these numbers directly from the trial balance and use them to create the financial statements which means if we're using a computer system it can pretty much do that automatically if we break these two out now the other way we might want to see these is if we have multiple accounts then we might want to see these broken out on the trial balance with multiple loan accounts because then we can see the loan accounts directly in the trial balance and that's what we'll take a look at