 In this presentation, we will take a look at the financial statements, the balance sheet focusing in on the short term and long term portion of loans. 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 then 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 two loans here, two amortization tables. This time on the trial balance, we're going to represent those as their own accounts on the trial balance, which could help us to track things on the trial balance nicely. Then we're going to take that information and break it out to the balance sheet. And we're going to focus in on those loans. So the balance sheet is in balance. We're going to show something that's going to be in balance, just a quick little balance sheet, but focusing in here on the liability section. So the assets here are going to be represented by the green accounts, the liabilities where we will be focusing the equity being all these blue accounts, adding up to 1 million 105, 316, this amount here. Once we finish up the short-term and long-term portion, we will be in balance, assets, equal liabilities plus equity. Our focus here is that we have these two liability accounts now, these loans, but we broke them out on the trial balance as the actual loan. So if we sum them up, we usually want to report it on the balance sheet as just one lump sum because nobody cares who the loan is from. We don't care about the bank number. We do as the accountants, but obviously whoever's reading it, especially if they're outside the company, don't really want that information. They don't need it. So what we want to do instead is break this out not by loan, but by short-term or long-term portion. So this is our problem here that we need to do. Now it might make sense for us, so that means we have to come up with these numbers kind of outside of our trial balance. Now this might make sense for us to do because from a trial balance perspective, it makes it a lot easier to track our loans if we break them out by account number because then we can always tie out our loan balance after we make each payment on the amortization table to the amortization table, which makes perfect sense. I mean, from a bookkeeping standpoint, that would probably be the best thing to do. We can see all the detail. We can see a lot more detail just on the trial balance. But when we then create the financial statements from it, we're going to have to make some adjustments to combine the numbers in terms of a short-term or long-term portion. So that's going to be our goal. The total here adds up to 128,767, but we need to break out the short-term and long-term portion and then somehow report that on the financials. So if we do that, we're going to go back over here and we're just going to say that here's our two amortization tables. As of our cutoff date, this green mark is where we are at for both of them. So in other words, this is the balance we are currently at and that ties out to what's on our trial balance. So this loan has 92,655, this loan has 36,112 on the trial balance. That's correct, but we need to break it out not by those components, but by the short-term and long-term components. So what we're going to do is do the short-term and long-term portions, which if this is the total, including short-term and long-term, 12 months out is the short-term. So we want just the principal, not the principal and interest payments, but just the principal because that's all that is owed as of now, 12 months later. If we add up those 12 payments, it adds up to 3182. Or in other words, if this is where we stand now and this is where we stand 12 months from now, the difference between those two, subtraction, is the 3182. This is the short-term. This is the long-term. On the other loan, this is where we stand now. This is where we're on payment seven of this loan. This is what is still due, where we haven't yet paid as of the cutoff date. And if we take a look at just the principal and add up 12 more payments, we owe 7100, which is also going to be where we stand now minus where we will stand or what we will still owe after 12 payments, the difference being 7100. So for this loan, in other words, this is our long-term portion. This is our short-term portion. For the second loan, this is our long-term. This is our short-term. We'll do a little worksheet to just break that out. We're going to say, for the first loan, here's the loan number, which I'm pulling just from this here. So I break it out. And this is often useful to have when you're recording the loans. You might want to just pick the last four digits of the loan number, because that'll be the most distinctive number and put that on your trial balance to track each loan. So that's one way to try to distinguish these loans. So we're going to say that this is the short-term. It's going to equal this amount for the first loan. And then for the second loan, the short-term amount for the second loan is going to equal this amount. And then the total then is going to be the sum of those two, 38182. Long-term portion for the first loan is going to equal this amount. Long-term portion for the second loan is going to be this amount. And then if we take the total of those two, we get the 90,000. And then the total then for both loans is the 38182 plus the 90,585. So if we look at our trial balance then, we can see that that makes sense because here's our current loan has a total of this amount. And that's going to be this, I'm holding down control, and this, 92,655. That says 92,655. And the second loan is this and this, I'm holding down control. And that's 36,112. That's the 36,112. And the total between these two, 128,767, is the total here. So all we did was break this out not by loan number, which would be these two and these two, but by short-term and long-term because that's what we need on the financials. So now we can just go to the financials over here and we can break these two numbers out differently with our worksheet. We're going to say this now equals, according to our worksheet, the short-term portion. And this number now equals, according to our worksheet, the long-term portion. And then if we add those two up, this and this, 128,767 adds up to, of course, the total here and adds up to the total between these two, which are the two loans, 128,767. And that'll put us back in balance. So we're back in balance here. So this method works great in that it allows us to track these amounts by the loan amount. We don't really break out the short-term and long-term portion because that makes it a lot more difficult for us to track these balances to the amortization table because it'll get messed up every time we have another transaction. So it makes it really nice for us to feel assured as bookkeepers that our loan is correct because it ties out to the amortization table. But it also means that we can't really just generate the financial statements as most people want to see them directly from the trial balance. We'll have to adjust the financial statements in some way to break out the current and long-term portions.