 QuickBooks Online 2023 Reversing Entry Loan Payable Short Term and Long Term Portions Get ready to start moving on up with QuickBooks Online 2023 Here we are in our Get Great Guitars Practice File We started up in a prior presentation using the 30-day free trial We also have opened the Free QuickBooks Online Sample Company If you want the two open at the same time we suggest Incognito Support Accounting Instruction by clicking the link below giving you a free month membership to all of the content on our website broken out by category further broken out by course Each course then organized in a logical reasonable fashion making it much more easy to find what you need than can be done on a YouTube page. We also include added resources such as Excel practice problems PDF files and more like QuickBooks backup files when applicable So once again click the link below for a free month membership to our website and all the content on it. Or another browser you can open the Incognito window if using Google Chrome by selecting the three dots in the browser Incognito window typing into the search engine QuickBooks Online Test Drive we're using the sample company to compare the accounting view the one Get Great Guitars is in and the business view the one the sample company is in you can toggle between the two views by going to the cog up top switch the view down below duplicating some tabs to put reports in like we do every time right clicking the tab up top to duplicate it we're going to right click that duplicated tab and we're going to duplicate that duplicated tab then we're going to go back to the duplicated tab that we duplicated first and then down to the reports on the left hand side so that we can open up a balance sheet report by the way if you're in the business view the reports are located in the business overview and then the reports on the left hand side just so you know tab to the right we're going to go down to the reports on the left this time opening up the profit and the loss closing up the hamburger scrolling up we're going to change the range from 010123 to 02 let's go to 03 3123 a little bit of a switch up because we're going to be doing a reversing entry this time remember the cutoff date is 228 February 28th but we're going to reverse it as of the first day of the following period in our case 31 March 1st drop down we're going to go to the months see it on a month by month so there's january there's feb there's march the cutoff date is feb 28 going back to the tab to the middle closing up the hamburger change that range once again to the same 010123 to 03 3123 also with the drop down want to see it on a month by month and run it to refresh it this is where we are at now last time you will recall and if you don't recall we'll just kind of recap it so don't worry about it we were down here in the liability area and we were talking about the fact that we had the short-term and long-term liabilities for the loans so we had each of our loans we wanted to break out on their own loan account for the internal reporting purposes and then we put each of those multiple loans under a parent account of loan payable that works well internally because then i can tie each of those loans out to their respective amortization schedules and track them nicely and accordingly but some of the loans might have a short term and long term portion as this second loan down here did which is necessary for external reporting purposes which might not be necessary for small businesses who are doing like a schedule c because they might not have the external reporting needs just need in the income statement for their tax preparation but oftentimes you need to break out for external reporting on the balance sheet short term and long term it's also useful to to try to see if you can cover your current assets with your current liabilities so we have to break that out so we did that here with the adjusting entry for this particular loan having a short term portion of the 13108 which we could see here which is the sum of the next 12 12 reductions to the to the principal payment amounts not including the interest portion and then down here we got the long term amount which according to our amortization is where we will be which you could get to where we are now minus the short term or it's also this number where we will be after a year from the current point in time so now the problem is well that's correct we got to be correct as of the cutoff date but the adjusting department can't stop there because now when i go back to the accounting department accounting side of things i've got this short term and long term portion i can't just tie out one loan balance to the amortization table every time i make a payment i would need to if i'm going to use this short term and long term method for this particular loan readjust the short term and long term portion that's way too tedious no one wants to do that that's why we have an adjusting entry process in the first place therefore we're going to reverse our adjusting entry to put everything back in one account as of the first day of the next period so that we can get things right as of the cutoff date and get things back to where they're right for the bookkeeping standpoint and the ease of data input for for the normal accounting process with the reversing entry after the cutoff date all right so let's go into this February just to look at the loan and see how we're going to reverse it if i go into it here there's the there's the adjusting entry we made and of course we could just reverse it entirely so you might even like take a screenshot of this and then paste it somewhere and then do the exact opposite of it now that i see that in the other way you could do it is with a with a register so so i'm going to close this back out since there's only two accounts affected let's use the register method so i'm going to go back and then go to the tab to the left and we're going to go into our chart of accounts accounting on the left hand side and chart of accounts if you're in the business for you by the way the chart of accounts in case you were wondering although i'm sure you know by now if you've been following along it's in the bookkeeping and then the chart of accounts and then we're going to go to the chart of accounts close this back out now these are both balance sheet accounts so i can open up either of them using the register so i think the easy one might be the long term because i need to bring it back to zero so that's this one down here so i'm going to go into the register related to my loan and i'm just going to reverse the journal entry i did before bringing it back to zero so i'm going to go drop down journal entry 030123 and we'll do this is going to be called a reversing entry and this is going to be a decrease for that same amount which i could find here or i can find there i'm just going to reverse that so it goes back to one account with the total of the 6987813 so we're going to say all right this is going to be 56769.59 uh decrease and the other side going to loan loan payable and the chase loan for the short term current liabilities there it is movie b to the end let's go ahead and run it running i was running back to the tab you may not you may not believe this but i can run like the wind blows not really i'm going to scroll down and then note as of the cutoff date now if i go to my liabilities we can see that we still have as of the cutoff date it's so nice that we could see it side by side like this the cutoff date you'll recall is 228 february 28th 13108 and then we reversed it bringing us back to the total loan balance in one account so that the accounting department can then do their thing recording the next transaction uh to one account instead of having this crazy two account thing happening down here in the long-term portion we broke out the long-term portion in accordance with our amortization schedule here and here or here whichever way you want to look at it and then we brought it back to zero because i don't want to have that other account involved per loan when i'm doing the day to day journal entrée that's what i'm talking about so if i go back up so that looks good if i go into the transaction it happened on three one so there's our journal entry and of course if i go into the journal entry we could see it in journal entry format i'm going to copy it put it down here as well and the description and so that looks good no impact on the income statement for this particular adjusting entry it's just two balance sheet accounts breaking out between the short-term and long-term portions all right so that's it let's open up some reports on the right hand side right clicking to duplicate the tab let's look at the journal report this time because i don't think we did last time and we could see the adjusting and reversing entries scrolling down to the reports on the left hand side to do so closing up the boogie typing into the reports journal the journal and then i'm going to do the adjusting entry which we did last time as of o 228 23 o 228 23 all adjusting entries as of the cutoff date 228 we want to look at it filter it by journals only customize and up top to do so we want to hit the filter drop down boom hit it and then we're going to say this is a journal run it and so there we have it so these first two we're not adjusting entries we might show how to how to remove them we can export to excel and remove them if we're trying to give this to a client or something these are the adjusting entries as of 228 this is the one that we did last time and uh this is the uh adjusting entry that we're going to reverse now so now we're going to reverse it so if i go back up top and go one day up boom boom run it so now we have reversed it and it's interesting because notice the debits and credits are like the thing that was kind of making me uh look at it a little funny is before like if i was to enter this with a journal entry i would have put the debit on top because i'm the adjusting entry but because we use the register we just happened to they we happened to use it and quickbooks put this one on top so which was which was kind of making me but remember the general idea it doesn't matter but that but the general idea is that when i then make the reversing entry i would usually uh reverse this the same format meaning i'm not going to change the order of of the which is on top i'm just going to change the debits and credits it just kind of i was going to mention that but but then i noticed that it did the opposite with the original journal entry because of the use of the register but in any case interesting little thing there at least i thought it was probably not that interesting in it but it was there it is so now let's now let's open up our trial balance i'm going to open up the hamburgie reports i thought it was interesting or i thought i'd just explain why why i was wigging out here trial balance trial balance it was totally a justifiable wig out 010123 to 033123 and then we're going to hit the drop down month by month we want to see it run it january february march so the cutoff date 228 february 28th but then we reversed it in march so you can check your numbers if you're tying out great if not try to expand the date range see if we entered something in the wrong date range or something like that and then at the end of the period we'll take a closer look at those journal reports to further drill down on any discrepancies so we can demolish the differences and do away with the discrepancies