 In this presentation, we will enter a reversing entry for later two notes payable. Time to engage with Sage 50 Cloud Accounting. Here we are in our Get Great Guitars file. We're gonna start off by opening up our reports by going to the reports and forms dropdown. We'll go on down to the financial statements, which I missed. We went to the inventory, but I'll go back up to the financial statements now. It's okay. And then we'll go into the balance sheet. So we're gonna go into that balance sheet. We're in February, second period, that being February. I'm gonna say okay, that's gonna open up our balance sheet for the month of February. You'll recall in a prior presentation, we've been looking at these loan payable down below. We're gonna be concentrating on that one where we have the short-term portion and the long-term portion. We broke out then the short-term portion here and the long-term portion there in accordance with our amortization table here. So here's the amortization table. So here's the short-term and long-term portion we broke out between these two amounts and made our financial statements reflect the short-term and long-term portion. Those two adding up, of course, to the total balance of the 69,878. In other words, the loan balance as of the financial statement date is in accordance with the amortization table 69,878. However, we couldn't record that in one account. We had to break out the short-term and long-term portion of it into these two components. However, for the bookkeeping purposes, I like having it in one account, right? So I would recommend thinking about the adjusting entry process as being separate and possibly by separate departments completely to do this and then think about how you can work these two things together because there's two different objectives that are basically happening. When you do the internal entry kind of process or if you think of them as a different department, their main goal is to make things logistically sound easy to do, repeatable processes that they can put in place, record the bookkeeping as easily and painlessly as possible. The adjusting entry process as of the end of the time period is to make everything correct on an accrual basis as of that point in time period so that they can make the financial statements and report the financial statements in that basis to help with decision-making and with the use of external users and to conform to that standard. So now that we have done that in the adjusting process, what we need to do is think about, well, how can I get back to making things logistically easy for the bookkeeping department? And that would be a reversing entry. So now that I've broken out between short-term and long-term, between then I'm gonna reverse out and bring it back into one account so that when the adjusting, when the normal bookkeeping process deals with it, they can tie it into the amortization table without having to figure out the long-term and short-term portion. And just realize this is really practical because almost nobody breaks out the short-term and long-term portion of the loan balance every time they make a payment because you can see that that would be tedious to do. So what we're gonna do is we're gonna keep it in one balance and then break it out every time we need to do an adjusting entry at the end of the time period in accordance with the amortization table. So basically I'm just gonna reverse in the entry that we did last time, which was to break out the long-term portion of the 56770 and put it all into one balance again. All right, so let's do it. So we're gonna go back on over here. And we are then gonna go to our tasks. And we can actually see this journal entry. Let's actually look at the journal entry before we do this. We could say, okay, this long-term portion, if I double-click on it and I double-click on the journal entry, there's the journal entry. So we're gonna reverse this exactly. This is the journal entry that we are going to reverse exactly as of the first day of the following time period. So let's do that. I'm gonna close this back out and then I'm gonna close this back out and then I'll go back into that journal entry format in a different way. So I'm gonna go back into our data input screen. I'm gonna then be opening the journal entries from the tasks dropdown and then go to the general journal entry. I'll make this large. Now the key here, this is a reversing entry. We're gonna make all reversing entries on the first day of the next time period. So I'm gonna make this March 1st. That doesn't always conform with basically the best accrual basis thing to do here. So remember, our goal isn't to be on a perfect accrual basis system for as much time period as possible. Our goal is to be on a perfect accrual system as of the cutoff date. That's what the adjusting entries do. And then get back to a logistical good condition as soon as after we can. That's what we're gonna do with the reversing entries and then make it as easy as possible for us to see what is happening when we do so and by putting all of our reversing entries on the same day, the first day after the period in, the cutoff date, that'll make it a lot easier for us to find those reversing entries. So last time we debited account 2500 and credited 2700. I would actually usually follow the conformity of using the same order of top to bottom, meaning I put account 2500 on top. So I'm gonna still put it on top even though I'm gonna credit it now, right? So I'm gonna put 2500 as the current portion and then I'm gonna put it on a credit. So I'm not gonna put the debit on top. I'm not gonna try to reorder the accounts, in other words, to put the credits on top because that's more difficult in my mind. I would rather have the same top to bottom number of accounts and then just reverse the debits and credits. So that's what I'm gonna do here and then we're gonna say that this is gonna be for the 56770. So that's gonna be the amount of the 56770. And then the other side is going to be the 2700. That's the long-term portion, which is gonna go back down to zero. So we're gonna say that's gonna be the debit 56770. Then we should put in the description, this is a reversing entry. I'm gonna copy that. Roger out, Roger. And then we're gonna put that on the bottom too. So there's the reversing entry. Let's go ahead and save this. That should put everything back into the one account. So I'm gonna save that out, close this, and then go back to our balance sheet. Let's open up the old balance sheet here. And then as of the end of February, we're still, we still have this broken out. Now let's go to the next time period in March. So I'm gonna take this up. I'm gonna pick this up for March. We'll go to the range up top. Then we're gonna be picking up the third period. So March, and then say okay. So there we have it. So then if I go back on down, we now have in that loan balance the 69878. So the 69878, which is the full balance here. There's the full balance of the loan. Now we can tie back out to the amortization table. Next time a loan payment is made, it can be made in accordance with this and tie out to this number on the amortization table, not have to worry about our adjusting departments, funny business of breaking out the loan into a long-term and short-term portion. In the long-term portion, it's no longer there, no longer visible because it's been reversed. It's been taken away. If we want to see it, then you could go to the options up top. You can add the zero balances, say okay. Cause I wanna see the zoom in feature and then I could go down here and zoom into that zero, zoom in into the zero, and that'll show us that it had a beginning balance there and there is our reversing entry. So that's gonna be it for now. Let's get out of here.