 Purchasing power is less because the loan balance was less than it originally was for the second month So let's go ahead and save and close it and check it out Let's go to the balance sheet and see what's happening happening in the balance sheet in the current period now Go into the checking account and we will of course check out the checking So same numbers here between these two checks looks the same there go back But when we go down to the loan down here The loan is a rebel and it does something different. We're going to go into it It's acting all on all crazy on its own here. It's got different stuff happening. That's where the problem That's where the problem is now the loan balance if we're entering it this way according to the amortization table Should tie out to the amortization table 69878 13 so 69878 13 so that's correct By the way, if you wanted to use an amortization table that you look up Just look up amortization table and you can calculate it with these quick little tables as well I still think it's better to do it internally because that but that maybe I just like doing that But if you wanted to use the amortization cable for budgeting, I think it's good to do it in Excel I just think it's a good practice to look at too, but a lot of people probably Aren't into that and that's cool. So let's go to the income statement and if I go into the income statement then we need to refresh And so down here now, we've got the interest if I go into the interest for February Then we now have The 300 and the the the 295 59 So we have different amounts of rent the rent per month is going down Even though we're making the same dollar amount of total payment because the loan balance is actually less Even though we're paying off the same dollar amount So you can see that the trade-off here what what why do we structure the loans this way? Because we want to have the payments Here and here be the same, right? We want all the payments to be the same because that makes it easiest for like just cash flow budgeting But the the cost of us keeping the dollar amount the same Is the fact that the interest in principle will differ Because of the reduction kind of in the in the loan balances. So there's kind of some pros and cons Of that. So remember if you if the easiest way to do this If you work with two people Would be to like I say just report the whole thing to a reduction of the loan and then let your accountant Adjust it according to the amortization table at the end of the year where they can just break it out at your end Right because the idea would be if I just if I just recorded the full amount reducing the loan My balance sheet and it would be off And I would have nothing on the profit and loss for interest and then they can do a journal entry Which would basically record all the interest which would just be the sum of this And and record interest expense on the other side to the loan balance Resulting in the proper interest expense that we can then put on the tax return or on financials And then the ending balance should tie out To what it should be at the end of the year, right? That would be some pretty easy adjustment to make if You know if you have an accountant that can do that if they don't do that Like if you if you try to use that method and you don't have a tax preparer that knows how to do that Or they just forget to do it or whatever you don't tell them to do it then You're not going to get the interest expense, which should be a deduction for taxes at least In the united states, which can be Significant so if you're going to plan that way you got to make sure that you're Talking with people that know what they're doing and have and you've got some communication Happening to make sure that what needs to be done is being done Okay, so in any case that's going to be it. Let's go to uh The trial balance and see where we stand over here And so we could I need to change the range again 0 to 28 to 4 And let's run it now note again You could try to do this on a month by month basis, but like we said before it's not always Uh the perfect thing to do because notice down here on the income statement and both uh months Even you know in february it's recording the entire Income statement for the year. Why is it doing that? Because because quickbooks doesn't know it doesn't have the capacity to close out the income statement month by month It only closes out the income statement Basically year by year So that's why it's not it's not as good to do that So the result is that the balance sheet up here you can see Is reporting properly as of the end of february compared to the end of january But the income statement isn't being closed out properly. So you're basically Seeing this is kind of like the year to date Uh income statement instead of the income statement for just february. Okay So that's the idea But you can see these are the ending numbers Where we stand here. So we have the check if we if we go through this We've got the the the balancing on top of the income statement cash Is an asset calcimals an asset inventories an asset investments an asset payments to deposit asset prepaid insurance asset Accumulated depreciation contra asset tied directly to the furniture and equipment and then the liability So all the assets are basically debits liabilities and equity are what the company has That they're going to uh Or what the crew has claimed to what the company has Liabilities visa liability Uh for the state taxes the government the loan payable We owe that to the bank then the payroll taxes that we have withheld in our payroll taxes We owe that to the government and then the equity section is all of this down here now So we have the equity of the investment that we put in the owner's equity And then the entire income statement this part of the income statement representing the full two months year to date For 2024 if I was to add that up on the debit and credit side it should have a net Uh credit for the whole period right so we'd have The billable uh expense boom We're going to say start here 200 plus four six eight seven seven plus six seven eight oh minus 37242 minus five nine five point five nine minus two eight one three point five Six plus the three three nine point three three minus six nine eight three point three three minus the 700 minus the 410 minus the 620 gives us the six eight three one 85 if I go to my profit and loss to did I calculate that right? So we're going to say That's not what was for the month. That's for the year right six eight three one 85 boom So then so if I go to the next year Then quick books will properly close this stuff out to equity this whole income statement will roll into The owner's equity. Let's check that out going from 0101 to 5 to let's just say 0101 to 5 we'll just use the same and so now now everything rolls into uh the owner's Equity as you can see here. So that that that's how it's working So trial bounce was a little bit tricky great report to use works best when you're using it from a year by year basis The year to date numbers As opposed to a month by month at least with regards to Like the income statement because of the way the closing process works automatically within quick books But on a yearly basis rather than a monthly basis