 Hello in this lecture we're going to create the liability section of the balance sheet in prior lectures. We have taken a look at the assets in terms of first current assets and then property plans and equipment giving us the total assets at that time. Then we are now going to move on to liabilities and that will be part of the second part of the balance sheet meaning it'll then sum up to total liabilities and owner's equity. We are going to be taking this information of course from the adjusted trial balance the adjusted trial balance in the format of debits and credits we are now formatting it in the format of the accounting equation. Still the double entry accounting system just in two different formats just reshuffling the puzzles so that different readers can understand the financial statements even though they don't understand debits and credits. We will then be focusing in on the liabilities the orange accounts here. We will start off with the subcategory of liabilities that is current liabilities. Those are going to be liabilities that will be due within a year's time period so we have to pay something or do some work within that year's time period that is what makes it current. The year's time is basically an arbitrary number. The idea of it is that we want to know what's going to be due shortly so that we know that we have the assets hopefully the current assets that will be liquid enough to pay off those current liabilities that's the idea of breaking out the liabilities between short-term liabilities current liabilities and long-term liabilities those that will be due past a year's time period. Notice that we have the colon here that it is representing that it is the subcategory and then we're just going to pull in our number so we have the current we have the accounts payable we're just pulling that number in. Note that the credit is represented on our trial balance in terms of brackets but when we pull that into our financial statements no brackets we're not having debits and credits we're putting it on the inner column not because it's a debit or credit but because we're just going to list it out there so we're converting from debits and credits to a plus and minus format and so we're just adding up the liabilities and putting it in plus and minus. We are then going to pull over the wages payable same thing this number we're just pulling that over and then the under revenue we are pulling that over note that we are indenting these and then we will put the total in the right hand side so we're going to say the 12,150 plus the 2,500 plus the 8,250 gives us the 22,900. Note that we have total liabilities here rather than having total current liabilities why is that because we don't have any long-term liabilities so rather than us having total current liabilities and then saying we don't have any long-term liabilities we're just going to say hey this is going to be the subcategory of current liabilities and then that includes all liabilities including current and non-current if we had a long-term liabilities we would then have a total current liabilities subcategory and then we would be lifting out the long-term liabilities and have a subcategory for those so that can be a bit confusing when we don't have any long-term liabilities so keep that in mind if we plug that back into the balance sheet we now have the liabilities section we have created the current assets the property plant equipment we have the total assets then we have the liabilities we now will be moving to the owners capital section the owners equity section and that will then give us the total liabilities and equity finishing out the balance sheet and then we'll dive into some more detail about this number in the capitals account