 0. Accounting Software 2023. Adjusting Entry or Crude Interest. Get ready to become an Accountant Hero with 0. 2023. Here we are in our Custom Zero homepage. Going into the company file we set up in a prior presentation. Get great guitars. Duplicating some tabs to put reports in like we do every time. Right-click in the tab up top to duplicate it. Right-click in the Duplicate tab to duplicate it. Back to the tab to the middle. Accounting drop-down. We want to open the Balance Sheet. I'm opening the Comparative Balance Sheet we made last time. If you don't have that, you can open the Standard Balance Sheet. Tabbing to the right. Accounting drop-down. We want to open up the Income Statement. Again, I'm opening a Comparative one. If you don't have that, you can open the Standard Income Statement. Tabbing to the left. Looking at the Balance Sheet, we're now thinking about an Adjusting Entry period and Adjusting Entry as of the cutoff date for us. That being the end of the second month, 228. We're looking at one related to the Liability Account to start off with on our loan payables. Now remember, there's a couple different things that you might have to deal with with regards to the loan payables. One is the fact that you might have some accrued interest that you need to record. Interest that has been accumulated which you have not yet paid. That's the standard kind of accrual entry. That's what we'll deal with this time. Another common issue you might have is breaking out the short-term and long-term portion of the loan, which you might not need if you're sole proprietorship doing the Adjusting Entry for taxes because you might just need the Income Statement for tax reporting purposes. But if you're doing external reporting and possibly for internal needs, then you might have to break the short-term and long-term portion out. We will deal with that in future presentations. Right now, we want to just think about that accrued interest concept. To do that, let's go back on it. We're going to deal with this $5,000 loan first and then we'll in a future presentation deal with the larger loan breaking out short-term and long-term portions of it. So I'm going to go into our Excel worksheet and I'm going to make another Excel worksheet. This is the amortization table for the long loan. I'm going to create another just little amortization table for the short-term loan and just to understand the concept of why we might need an Adjusting Entry for the accrued interest. Now, our entry will be fairly small in dollar amount and therefore possibly not necessary because of in-materiality purposes. It's not being a large dollar amount. But the concept remains the same. Alright, so I'm going to hold down control and watch it. Now, I'm just going to add another plus button over here and this is I'm going to call this the short loan or short loan, a small loan, short loan and then I'm going to I'm going to format the entire worksheet. So I'm going to go up top into the triangle and right-click on the worksheet. This is my baseline formatting, formatting the entire worksheet. I like to work in currency and then negative numbers, bracketed, no dollar sign and I'll keep the decimals. I'm going to say, okay, I'm going to make the worksheet a little bit larger by hitting the plus over here or you can hold down control and scroll up on the scroll wheel. We're currently at 205% on the zoom in. Let's go a little larger. I'm at 265. Alright, and then in A1 I'm just going to put the terms of our loan. So I'm going to imagine the terms of our loan. It's a $5,000 loan and this, by the way, I'm going to make this whole thing triangle up top, home tab, thought group, bolding the whole thing. Hopefully make it a little easier to see. This is what we would get from, of course, the loan documentation and possibly they would give us an amortization table with the loan but maybe they wouldn't and maybe we would have to just create our amortization table which we can do ourselves. We can use online tools to help with the amortization table and or we can get a CPA firm to help us build an amortization table. Months, we're going to say it's just a three month loan. So it's a very short-term loan. I'm going to say the rate is very large because it's a short-term loan and because I want to have a fairly significant dollar amount. So I'm going to say 0.35, 35% on the rate, home tab, number group, percentifying it and in the payment that we're going to make, three payments. I'm going to do a payment calculation just to show you how that works to figure what the payment will be which is a useful tool if you're trying to make projections on what kind of loan you might be able to afford in the future for example. I'm going to say negative PMT, negative is possibly not the most proper way to start it but I think it's the easiest way to start it instead of an equals and then we have the rate. The rate is going to be that 35% but that's going to be a yearly rate and we only have three months. We're dealing with months. So I'm going to take that and divide it by 12. That will give us the monthly rate comma the number of periods is going to be three. That's in terms of months which matches the monthly rate now. So that's good comma the present value is the 5,000. That's the loan amount you could close it up or you don't really need to. I can just hit enter and we come out to a payment that we're going to make of 1,764.82. We're going to make three of them. Now you could try to say okay well what's the total interest that we're going to pay on this? Well the total payments are going to be simply going to make this a little wider. Three payments of this. So this times three is 5,294.46 so that means total interest would be equal to the total payments minus the 5,000. However we would need to break that interest out between the three payments that we're going to be making. So let's just make a little amortization table to see how this works and we can see it conceptually on a payment by payment basis. So I'm going to make the C a little bit larger make a skinny C. Skinny C. C went on a diet and then we're going to say this is going to in a diet actually worked. What kind of diet did you do see? I once you could get rich with that diet tell people how that happened. And then interest this will be loan. I spelled that wrong interest that is it's not my the keyboard wasn't working. Loan reduction it's not my fault loan balance. Nothing's ever my fault. I just you just don't understand what the real problem is. Here's the home tab alignment center and then font group and we're going to hit the bucket drop down it's going to be black and white. So there is the loan terms let's put a border around this home tab font group just borderize it. Alright so then I'm going to put the dates I'm going to make this a date column now. Home tab numbers let's format this in the format of a date short date and then I'm going to say this is on two fifteen two three and then I can say three fifteen two three and I'm going to copy that down using my using my fill handle. So there's the payments that we're going to make. Now we're going to say that the the loan happened on two fifteen so this is point zero and then we're going to say that