 In this presentation, we will take a look at creating the financial statements, the balance sheet in particular, looking at the short-term and long-term portion of the loan payable note 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're going to have our loan on this side giving us the detail, our amortization table down here. We're going to enter any adjustments into our adjusting entries. We'll post those to our worksheet and then we'll create from the worksheet our balance sheet. So in other words, the balance sheet here is being made up of these accounts. So here's our just a little trial balance just to show us something in balance and let us focus in on where we want to focus. That being the short term and long term of the notes payable. So this is showing that the assets are these two adding up to one million two fifty four eighty four that adds up here. The liabilities are just these two numbers adding up to one hundred and twelve six fifty five. And that's going to be total liabilities after we make this adjustment. Our problem of course is that this ninety two six fifty five has a short term and long term component to it. How should we deal with that? There's a couple different ways. We're going to talk about another way to deal with that here. And then our equity is all of this. That's adding up to one million one forty one four twenty one. That's this number after we're done with this total assets will equal total liabilities and equity. So again, our goal here is to look at the short term and long term portion of this note and it's an installment note. So it's paid every month. That's going to be some of it that's short term and some of it that's long term. So there's a couple of different ways we can do this. We could put the entire short term or just have one loan oftentimes. So if we have one loan that we're dealing with, then we may on our trial balance just track that one loan in one account. And that's the easiest way to do it because that will be easiest to match out to the amortization table. In other words, if I have this amortization table and there's been three payments that have happened, if we have properly allocated between interest and principal for those three payments, we should then be at a balance of ninety two six fifty five. So that's this balance here. However, that ninety two six fifty five doesn't represent short term and long term portion. It's just the entire thing. So we could just use this amortization table to break out the short term and long term portion. And then and then adjust the financial statements and just fix the financials without messing with the trial balance. Or we'll do as we're going to do here. We could create two accounts on the trial balance and make an adjusting entry. So at the end of each month, we'll make an adjusting entry and just break out the short term and long term. And what that'll do, that's useful if we have a system that just makes our financial statements. If we're using a computer system that's just going to generate our financial statements and we don't want to do it outside like in Excel or some other system, then we need to find some way to make the trial balance have the short term and long term so that like if we did it in QuickBooks or something, it would just spit out the right report. And the only way to do that is to fix the trial balance. So that would be a reason to have a short term and long term portion just on the trial balance. Even though it's going to change, we'll just adjust it each each time period. So to do that again, that we have to break out the short term and long term. Now here's where we're at now. 12 months later, we're going to see how much we're going to pay in 12 months. Again, the tendency is to say, well, the payments are here. I'm going to make 12 of them, 1, 2, 3, 4, 5, 6, 12 adds up to here. You would think it'd be 38, 160. But again, that's how much we're going to pay, but it includes interest, which we haven't incurred yet. So we can't include, we're not included in the interest even though we're probably going to pay it anyways. It's not a liability yet. It's not part of this number because we haven't incurred that interest yet. We haven't used it. We can only pick up the principal portion, which is these amounts. So it's going to be this plus this plus this 12 of them, 12 payments, or the 3182. Or in other words, this is where we're at now in terms of the balance that is owed. After 12 payments, this is where we will be at. So if we subtract these two out, or if we sum these up, I'll sum up the payments are going to be here. That adds up to 3182, which is also, of course, going to be, if we subtract the 92655 minus 61573 is the 31082. So in other words, this is the current portion. This is the long-term portion. So now we're just going to do that, make that adjustment here so that we have it in our trial balance. And once it's in our trial balance, we can generate the financial statements automatically from the trial balance exactly without having to break it out kind of manually on the financial statements. So what we'll do is we'll say, this number needs to go down. It's all in short-term now. So I'm going to do the opposite thing to that. We'll debit that, right-click and copy. Put that up top, right-click and paste 123. And that needs to go down by the difference here. Currently here, it needs to go down by the difference. So we could say it's got to be equal to what we're at now minus the current portion. And that'll bring it down by the 61573, or we're going to take it down by the long. We could also just pick up this number, 61573, and that'll bring it down to just the current portion. And then we're going to say negative of this number, and that'll be the long-term portion, which of course it's at zero. The long-term portion is here, so we need to make it that number. So we're going to copy the long-term, put that on the bottom in H4. Then we'll go home tab, alignment, increase in denting, and there we have it. So if we post this then, here's the short-term, here's the short-term. We're in N6 where we say equals, point to that 61573 and enter. There's the 3182, and then we've got the long-term in N7 equals 61573, bringing that balance out. So the total then still adds up to the 92655, which is this number. That's the total, but it's broken out between the short-term and long-term portions. Now there's pros and cons to this. Again, the good thing about this is that now these numbers can be used directly to create the financial statement. The bad thing is that this will probably, like if there's a lot of other accounts, this would be in the current portion account, and this would be in long-term. They may not be right next to each other on the trial balance. So whenever we do this process, we have to add those two accounts up and then match it to this amortization. If we have a lot of loans, that could be a tedious process because we're going to have to somehow put them all together in a short-term and long-term grouping. And we'll take a look at an example of that. But the nice thing is now that we go to our financial statements, I can generate them directly from what's on the trial balance without having to combine anything. I don't have to combine any numbers here to make the financials. I can just say this is the current portion and it'll just do it automatically. I can set up the computer system to do it. And then this is the long-term portion and then it'll be able to generate that automatically. And now we're back in balance with the assets equaling the liabilities and equity. So we're able to break those two out by taking them just from the trial balance.