 Welcome to this Farm Accounting 101 presentation on sample accounting entry number 4, recording a crop loan deposit for the 2019 crop year using an Excel spreadsheet. I'm Robert Page, Regional Extension Agent and member of the Farm and Agribusiness Management Team with the Alabama Coroperative Extension System at Auburn University. As we have said in earlier presentations, the Farm Accounting 101 series is intended to help Alabama producers to improve their farm financial literacy. Farmers like any other small business have the same basic financial transactions every year so we study typical checks and deposits. We also learn the accounting principles behind these checks and deposits. Today's presentation shows a typical farm transaction of recording the bank deposit of this year's crop loan from the farmer's ag lender. Let's review sample accounting entry number 4. In this example, the farmer applied for and received a $100,000 operating loan for the 2019 crop year from his local ag lender. Before we look at the entry though, here's a question. Should the crop loan be considered farm income? The short answer is no. Loan proceeds are not normally considered income. However, it is both a cash flow item and a $100,000 farm liability with principal and interest due within 12 months, which we are interested in. Here's an FYI note. If the crop loan was not repaid or forgiven by the ag lender for some reason, it may be considered income. Check with your tax preparer for further details on forgiveness of loans. Now let's switch over to our Excel spreadsheet. In this example, we are now looking at sheet 1 shown right here at the bottom under part 1 income. Our earlier presentations have concentrated on the sheet verse number 2, which were expenses. Today is shown as an income sheet. The date is 227.19. We received the funds from the ag lender 2019 crop loan proceeds. So we received $100,000 in bank deposits, which is shown here in column C. Now is it entered as an income item in columns D or later? Let's scroll. The answer is no. It's not. It's not sales of livestock. It's not anything that would be considered a loan. It is simply an income item. It's simply a loan from the bank for the crop year. Therefore, in that example, we just put it in column N, other cash adjustments. Then we check, are we in balance? Yes, we are. Looking at column O, we are in balance. Now in this situation, we've normally looked at sheet 1. Now let's briefly look at the profit summary in sheet 3. Here in sheet 3, now you can see that the $100,000 is shown in sheet 3 as other cash adjustments. It is not shown over here in our profit and loss report, because it is not a profit and loss item. Now let's switch back to the PowerPoint presentation. For those of you that have not seen this spreadsheet yourself, it is available for producers to download. To find this spreadsheet, visit the ACES website at www.aces.edu and select the topic type entitled Farming and then the Farm Management to find the article entitled Using an Excel Spreadsheet for Farm Financial Records. There is a link to this spreadsheet embedded in the article. Now let's briefly review the accounting entry for this bank deposit we entered into Excel. This is a simple rather than a compound entry. In line 1, cash farm checking, which is a current asset, increases with a debit entry for $100,000. In line 2, loan payable ag lender number 4461, which you are in this example, we are assuming is the last four digits of the loan number, which is a current liability because this loan is due back to the bank within 12 months, increases with a $100,000 credit. Cash comes in, loan reliability also goes up. Thus, the debits and credits are in balance for $100,000. Reminder, this uses the Other Cash Uses column in the income sheet on the Excel Spreadsheet and is carried over to the Other Cash Uses boxes on the profit summary sheet in the Excel Spreadsheet. Finally, like all accounting entries, debit and credit entries must be in balance and this example, total debits and credits are $100,000. We close by saying thank you for watching today's Farm Accounting 101 presentation on sample accounting entry number 4, recording a crop loan deposit for 2019 crop year using an Excel spreadsheet. This segment of the Farm Accounting 101 series has been produced by the Alabama Cooperative Extension System Farm and Agribusiness Management Team at Auburn University in Auburn, Alabama. For additional information on the Farm and Agribusiness Management Team and other ASIS programs, please visit our website at www.aces.edu.