 QuickBooks Online 2024, reversing entry related to loan payables, short-term and long-term portions. Get ready and some coffee because we're diving into it with Intuitz. QuickBooks Online 2024. Here we are in our Dick Ray Guitars 2024, QuickBooks Online sample company file we've set up in a prior presentation, opening up the reports on the left hand side. We're in the favorites, right-click it on that balance sheet to open it in a new tab, right-click the profit and loss to open in a new tab, right-click the trial balance to open in a new tab. Let's go to the tab to the right, close up that hamburger and change the range. We're going from 010124 to 033124 because it's the reversing entry. We're going to select the drop down months and run it and then we'll tab to the right, repeat the process, hamburger needs to be closed so we can eat it, 010124 tab, 033124 tab, selecting the drop down months and refresh the report tabbing to the right. Once again, hamburger closed and we want the range at 010124 tab, 033124 tab, month by month, side by side running it. Let's go back to the balance sheet, recap what we did last time which was an adjusting entry. The adjusting entries are entries that happen at the end of the period, typically month or year to make the accounting or financial statements as close to the accounting basis being used which is typically an accrual basis but could also be a cash basis or tax basis as possible as of that cutoff date. We talked about last time the loan payable. We had our loan payables down below and we talked about the fact that there's many different issues with the loan payable that you want to consider and a few different options on how you're going to deal with those issues. The main issue however for us here was breaking out the short term and long term portion of the loan. So the general concept, the general idea would be that I would suggest having a parent loan payable account, typically a current portion or current liability and then have your loans underneath it as subsidiary accounts possibly including the number, last four digits of the loan number as well as the institution where the loan is at so you can identify each loan then when you pay off the loans you can do so according to the amortization schedule which is what we did in our practice problem decrease in cash by the amount of the payment and properly allocating the loan interest and principal being able to then tie out to the current loan balance after each payment. So that's one method that we can do. Remember that you could use another method however because that method of recording each payment and breaking out the proper interest and principal makes it difficult to memorize transactions and simply use bank feeds to record the transactions because although the payment repeats and is the same the interest and the principal differ therefore if you want to make it easy you can say hey look all I'm going to do is record the decrease in the payment to the loan account it's respective loan account so I can automate that process with the bank feeds and then at the end of the period myself or my CPA, my tax preparer can create the amortization schedule and properly break out the interest at that point in time as part of the adjusting process as well as break out the short term and long term portion. So those are those are a couple options that that you could use no matter which option you use however I think it would be best to to basically have a parent account and then break out all of your loan accounts underneath it so that you can have you can look at each loan individually from an internal perspective while still being able to collapse the loans into a loan payable current portion for external reporting something like doing the tax return or presenting it to a bank then we have the breaking out of the short term and long term portion so once everything is in the short term or one loan one line item per loan on the balance sheet then some loans are going to have a current portion to them if they're like an installment loan for example that we pay monthly so we have to break out the short term and long term portion so we mirrored the same structure down here in the long term loan payable and only one of them had a long term portion to them so we then broke out the long term portion according to our amortization schedule so now we've got the short term which is going to be just the principal not the interest payments for the next year because that's what a current liability is what is due in the next year the interest is not due in the next year even though you're going to be paying it in the next year because the interest has not yet been incurred in a similar fashion as signing a lease today for an office building has committed you to pay for the office building but you haven't incurred the expense given the fact you haven't used the office building yet so you wouldn't record the expense at this point in time so we only have the principal payments as the current liability that we would pull in and then so we have the short term and long term portion that we broke out short term portion being these payments to long term being where we're currently at minus the short term which will be equivalent to 12 months down the line on the amortization table so 12 months later will make these payments will break out the interest and principal properly the balance will be going down by the principal amounts to get us to you know where we will be a year later which is equivalent to this to this short term portion here so that's going to be the idea I'm sorry where we're going to be at the end is going to be the 56769 which will be equivalent to the long term portion and the difference between the two points is the short term portion that's a couple different ways that you can look at it all right so we broke that out properly now what's the problem with that well now I don't want to leave it that way for the bookkeeper because this is great for financial reporting because now I can do my taxes or give it to the bank or give it to the investors whoever needs these financial statements properly breaking out the short term and long term portion but in the internal bookkeeping side of things now it's like okay well what happens next time do I make a payment do I make the payment to the current portion do I make the payment to the long term portion do I really have to break out the short term and long term portion every time I make a new payment because it's going to be tedious to do that because you would think I would make the payment out of the short term portion and then I would have to do this calculation again every time and do an adjusting entry for the long term portion that more added difficult