 In this presentation, we're going to make loan payments from our amortization table breaking out the interest and principal portion with regards to those loan payments with the use of the amortization table as we go. Get ready because we're about to start with Sage 50, Cloud Accounting. Here we are in our GitGrate Guitars file. We're going to start off by opening up our financial statements. We're going to go to the reports dropdown. We're going to go on down to the financial statements. We're going to be taking a look at the balance sheet report. Let's open up that balance sheet. We're going to be in February. So I'm going to keep this in February. So I'm going to say OK. So there we have that. We're scrolling down. We have this $72,000 loan. We're going to make loan payments now on the $72,000 loan. We're going to do that with the amortization table we made last time. So we had an amortization table last time. Here's the loan payments. I'm going to make two payments on it, one at the beginning of the month, one at the end of the month, so we can put them both in our month we're working on and be able to record those two and we'll be able to see the change in the difference. The fact being that we have the payment will be the same, but the amount breaking out between interest and principal will change. Between these two, you can see these two change, but the payment amount will remain the same. Now remember when you actually take out the loan, you're typically going to know of course the loan balance you have and you'll typically know the payment amount. What you won't know is the interest oftentimes between each payment because to keep the payment the same, we had to change the loan terms, had to basically change the interest and principal portion of that interest payment each time. So that's going to be a problem. You could have basically an accountant or an adjusting department make the amortization table and simply tell them, hey, look, I'm only going to record the payment to one account to the loan account, which means I'm going to over-reduce the loan account. And I would like you to make the amortization table, break out the interest and principal portion. In other words, tie out the interest and the loan balance to this table after you make it and then break out the short-term and long-term portion of the loan if necessary on a periodic basis. That could all be part of your adjusting entry if you so choose by doing that. Then you can make the payment repetitive, meaning it's only going to have two accounts involved, just decreasing cash and decreasing the loan account. And then you can do a periodic adjusting entry to make those adjustments needed, breaking out the interest portion and recording the short-term and long-term portion. Or you can ask the accountant or do yourself, make the amortization such as this, then break out the interest and principal portion as you go. That way we can tie out to the loan balance each time, which will be this loan balance at the end. To do that, I would recommend having a separate GL account for each loan, not breaking out the short-term and long-term portion as you make the payments, but put them into one GL account so that you could tie that GL account into your loan balance here on the amortization table. And then in the adjusting process at the end of the month, all that needs to be done is really to consolidate the loans into basically one short-term and long-term account and break out the short-term and long-term portion. Okay, so let's do this. We're going to do the first one. I'm going to make this green so we can make this payment. We're going to be breaking out here. We're going to record the full thing, which means we're going to have both the interest and principal portion. So I'm going to make it green because that's like the one we're working on. And I'll make it really a bit larger here so we can see it better too. And then let's go back to our data. So we'll go back in here and I'm going to say that let's write a check. So I'll go on the vendor side of things. I'm just going to write a check. And this is going to be a check form. It could be an electronic transfer, so it doesn't necessarily need to be a check, but we're using the check document, the check form. So the vendor I'm going to say is Chase. Do we have Chase? I don't think we have Chase. So I'm going to add the vendor for Chase. That's going to be basically the bank. I'm going to say it's going to be Chase that we're going to be paying. And so I'll say new to set up that vendor for Chase. So there we have it. I'm going to put Chase here and then I'll copy that. And then I'll also put that here. And now the normal account would be the loan balance going down. The loan balance would be the normal account. That's going to be a liability type of account over here. So we've got the loan. I think it's this one. Yeah, that's the 2,500 account or the 5,795. That's the one I chose. Now we're going to need two accounts, an interest and principal portion. If you were just going to use the method of decrease the loan account, that would be the only account you need. And then you tell the accounting department to make the adjustment for breaking out interest periodically at the end of the period. So then I'm going to save that and close it. And then I'm going to put in the vendor. I'm going to put this is going to be Chase now, which we should have CH. There we have it. Alright, tabbing through this tab, tab, tab. We're going to put a number. And then I'm going to put this on 020120. The amount that we're going to pay, I'm going to break out the amount that we're going to pay, which is going to be the $13.59. That's a round date. I'm just going to keep it at $13.59. So I'm going to say $13.59 is the amount of payment. And we'll take, we'll call it cash or we could say check. If it's electronic payment, I'll keep it there. And I'll say, you know, maybe this is E12. And then down here, we can't just keep it at the 25 because we need to break out the interest in principal portion. So here's the kind of confusing thing. We got to use this split button. Say I need two accounts that will be affected. You could bring this, you know, over here so you could see the other accounts you're working with. The amount of the principal that's going to be going down is going to be that $10.59. The principal needs to go down by the $10.59. And then the interest is going to be the $300. So principal, I'm going to say $10.59. And then we need, I lost the amount, $10.59. And then we'll try this again. On the interest, it's going to calculate for us over there. We just need to pick the account, see if they gave us an interest expense account. It's going to be an expense type of account down below. So we're looking for something like interest expense. So there's insurance. I don't see interest. So let's go ahead and set it up. So I'm going to make a new account. So we're going to make a new account as we go here. So we'll add the account. I'm going to check the account numbers. So let's check the account numbers that are there. It needs to be somewhere down here in the expense area. So it's somewhere down here. Let's put it under the depreciation. So that's going to be $70.55. Let's say $70.55. So $70.55. And this is going to be an interest expense. And it's going to be an expense type of account. So we'll select the drop down here. We're looking for an expense type of account. So that's the one that's all we need. Let's go ahead and then say save. So that's good and close. And then this one needs to be going to that new interest expense account that we just picked up. There it is. $70.55. And that looks good. So there's the $300. So there it is. The full amount, $13.59. Broken out between the loan. Decreasing the loan by $1059. And recording the interest expense. What's going to happen after we record this, the loan balance then should go down to this amount, the $70,941. Let's see that. And we're going to go ahead and say OK. And then save this. So I'll save this. Then let's take a look at what happened. We're going to go open up that balance sheet again. Let's open up that balance sheet. And then we have in the checking account went down, double-clicking the checking account. It's going down by that $13.59. Closing this back out. The other side should go to the loan balance here. So the loan balance at $70,941. Is that what we have here? $70,941. Correct. So it went down correctly. If we double-click on that, then we'll see our payment, which is going to be the $1059 applied to it. Closing this back out. The other component is going to be on the income statement. So if we go back on over to our reports, open up the income statement and take a look at it. It's going to be for February. We want to show I don't need the zero numbers. I'm going to say OK. Income statement. There's our interest income of the 300. All right. So there is that. Let's do it again now. I'm going to say a month has passed. It's still February, but it's the end of the month. So we're going to record the second one at the end of the month just so we can see the same payment amount but broken out differently between the interest and the principal. So I'm going to say this one is done now. I'm going to ungreen it. So I'm going to right-click on it and get the green away, ungreen it, and then I'm going to go into the number two and we're going to apply the green there so that I don't get messed up on what I'm posting here. I could still get messed up, but that helps. So then I'm going to go back on over and we're going to write another check. Let's write another check, a new check. And this is also, of course, going to be to Chase. So Chase, and there we have that. I'm going to say this is as of the end of the month on the 29th, let's say. The cash is going to be leaving the account and the cash is going to be for that same amount, the 1359, that amount stays the same. And that's the 1359. And remember, we're at the end of the month so we're imagining the whole month has passed and we're making the second payment. So it's going to be cash, I'll say E-13. And then we're going to use our split item here again. So we're going to say the split. And it's coming out of, it's memorizing this account because that's the account with the vendor. But the amount that it needs to go down by is going to be now the 1063. So the 1063 here. So we'll take that. This is a 1063. And then the other account is going to be interest. So let's pick up the interest. That's going to be an expense account. So there's the interest expense. And now it's at the 296. And that's going to be this 296 there. So let's record that. That should leave us with a loan balance of the 69878, about, it's rounded. So I'm going to say okay. And let's take a look at this. Let's check this out. Let's save this transaction. Let's close this report or this form. Let's then go over to the balance sheet and we will update this. So I'm going to refresh it in case it hasn't been refreshed already. Open up the checking account. That was a wrong account. Open up the checking account. And then we're going to see there's the second payment. Notice it's the same payment amount here that's leaving. It's the breakout between interest and principal. That's going to be different. And then we're going to go down to the loan balance. That's the 69878. Does that tie out to what we should have here? 69878, it does. Then if we double click on that, double clicking on that item, we see now there's the change. There's the amount that was applied to the loan balance before of the total payment. It has now changed. Total payment now was the same amount applied to the reduction of the loan now differs. Closing this back out, the other side of course being on the income statement, the P and L, the profit and loss. So if we go on over there, we see now if it refresh if you need to. And we see now the 596 double clicking on that item. We see the two payments, the 300, the 269, which of course tied out to these two payments. And that is the 596. So there we have it. Notice this loan. If you have multiple loans, I would break out each loan into its own account so you can tie it out to the amortization table. And note again, we're not breaking out the short-term and long-term portion right here because that'll complicate things and we'd have a different short-term and long-term portion each time we make a payment. It's not worth it to break that out each time. So for that, we would want to do the adjusting entries at the end of the month or the end of the year whenever we need the financial statements. So that's going to be it for now. Let's get out of here.