 until the middle of March and then when the payment happens in the middle of the March it'll it'll it'll look like this they can just do the normal journal entry and not have to deal with the fact that that payable is on the books because if I look at the balance sheet now the books look like what the bookkeeper if we think of the bookkeeper is being separate than the adjusting department is doing right the bookkeepers saying okay I don't have any interest payable messing me up whatever and so if I go to the tab to the right and update it here let's add another column for February again because that's cool to do I'm gonna edit this thing and add another column another column date column and this is gonna be March I mean we already have February this is March adding March and let's customize that and let's save the customization so we have it there next time as well all right so now we can say that we have interest down here so we had interest recorded and then we reversed it now this should look fun this should look our kind of funny here because this is actually an increase this is this is increasing net income and it should be and it's down here it's not an expense it's a it's it's kind of flip because this is the other income and expense area so this is actually looking it's acting like revenue and it's an expense so that shouldn't be that shouldn't be the case that will look funny and notice the accountant if you do this the the accounting department will say that what did you do there's something that looks funny there because now I've got this thing hanging out there but if they record the normal transaction as of April April it will be correct meaning for example once we hit this point where they're gonna record this transaction what are they gonna record they're gonna record a debit to interest expense of 145 83 when they do that it will net out against this amount to give us the proper amount recorded in the second month which is 72 92 so it will then properly break out and between the two periods if we use this method without having to change the method of what the accounting department is doing when they record the transactions but you have to kind of understand that so that when people ask you why is that there then you can kind of explain well that will that's the adjusting entry it's gonna make sense after you do the the entry at the end of or when the next payment is due March 15th in this case so now you can see what happened is we recorded the manual entry that put it on the books we can't see the manual entry because this is just March let's bring this back to Feb Feb we do just Feb 28 so then we can see we put it on the books before the cutoff date so now we recorded the proper interest expense and then we reversed it after the cutoff date so that we can make the financial statements as a Feb 28 the cutoff date and then after we reversed it which results in if we run a report just for March something that's not quite right right 72 you showing like a negative expense account as of just the month of March but it will be correct when they record their normal journal entry in this case in the middle of the month on March 15th and they record the full amount of the interest expense 145 83 because it'll net out to half of it being recorded in March right that's the that's the idea of it okay that's what the reversing entries do they're an attempt not to mess up the bookkeeping department so that you can do your adjusting entries and tweak everything to be perfect as of the cutoff date for financial reporting purposes either for external reporting or for taxes and still not mess up the bookkeeper as they move forward with their internal reporting purposes alright so let's let's now open up our reports and let's look at the journal report I'm going to right click and duplicate and let's open up a journal report to see the journal entries we've been creating thus far I'm going to go to the accounting drop down reports and open up a journal the journal report this is my journal of activities some people like to write it down write their journal with like prose text but we this is what our journal looks like add a new journal well no I'm not adding a journal what are you doing what are you doing that we're looking at the report here and let's make this as of the date custom range and let's make it as of March 1st so we had a reversing entry as of March 1st boom and so now we can see our reversing entry it's a manual journal entry we can also say that we just want to see the manual entries up top and so we can see just our reversing entry there and we can generate this report and remember the reversing entries can be identified because they're always going to be the day after the adjusting entry the day after the cutoff the day after 228 which is in our case March 1st because they'll be journal entries and because they'll be manual journal entries and because we're going to post in the description that this is a reversing entry all right let's also open up a trial balance I'm gonna hit the drop down up top and I'm gonna go down to the reports again I'm gonna make the trial balance for the whole year this time because this is the reversing entries are included in March so we changed something after 228 after the cutoff date so let's go let's go to the drop down and just say we'll just say custom 2023 the end of it I'm just gonna say the whole year and so this is where we stand if your numbers tie up to these numbers great if they don't then the things that we changed this time were of course the the payable account and where's that payable account where's the pay it's gone now because we made it down to zero and then the interest expense account those are the things that we had a change to and remember it's not a change as of 228 we made it after 228 that's why we're running the report for the year