QuickBooks Pro Plus desktop 2022 adjusting entry loan payable short term and long term portions. Get ready because we bookkeeping pros are moving up the hilltop with QuickBooks Pro Plus desktop 2022. Here we are in our get great guitars practice file going through the setup process with a view drop down the open windows list on the left hand side company drop down homepage in the middle maximizing it to the gray area. We’re going to the reports drop down company and financial take a look at that balance sheet standard.
00:32
We’re then going to customize the report up top with a range change. Oh 10122202 28 to two, we will go to the fonts and the numbers changing the font size bringing it on up to 14. Okay, yes, please. And okay, we’re not going to be opening the income statement because we have no income statement effect with this adjusting entry. Therefore, let’s go on down to the accounting and taxes and open up the trusty Trial Balance doing a range change from Oh 1012 to 202 28 to two, we will then customize the reports up top go to the fonts and numbers and change the font bringing it up to 14. Okay, yes, please.
01:15
And okay, let’s go back to the balance sheet now in the open windows and focus in on it scrolling down to the liability section we’re focused in on our loan payable. You’ll recall when we set up the loan payable, you have a few different options in terms of how you’re going to set up your loans. One option is that you can create one loan payable accounts and then have the supporting backup of it with the multiple kind of sub ledgers which could be your amortization tables looking something like this, or, and I think this is more practical from an accounting standpoint, you can set up one account for each loan and either call it simply loan payable or if it’s under a sub account of the loan payable,
01:55
possibly naming the institution possibly needing the last four digits, so the loan number so that you can then tie out each individual loan to the amortization table as you make the loans or possibly as you enter kind of adjusting entries at the end of the period. So that’s what we’ve done here. These two accounts are not great for display purposes for external reporting purposes, because they’re more like internal formats that we named these four, but you have this nice collapse feature that allows you to collapse the loan, so that you could report it externally, just simply as loan payable in a more condensed type of balance sheet, which is nice.
02:32
The other thing we have to deal with is the fact that we could have a short term and long term portion of the loan, the CIT this little, the smaller loan we have up here is only short term, it’s all going to be due within the next year. So it’s a current liability in other words, but if we have a loan that’s going to be extending past a year, then we could have a short term and long term portion due to the fact that if it’s an installment loan payments made on a monthly basis, then the payments that are going to be due in the next month will be short term.
03:01
And then everything that’s going to beyond that point is long term. So we need to break out the short term and long term portion, which presents another kind of problem. Because when you’re thinking about the the reporting purposes, we want to show the short term and long term portion broken out for reporting purposes as of the end of the month, or year. But for internal purposes, it’s going to be tedious to have two accounts for each loan, because that makes it a little bit more difficult for us to tie into the amortization table as we make payments.
03:33
Therefore, we’re going to make an adjusting entry to break out the short term and long term portion on a periodic basis, in this case, the end of the month. And then we’re going to make a reversing entry, putting them back into one account so that we can have that one account for the standard kind of accounting process. And that’ll be our breakout between the logistics that works well for the data input, as well as the making the financial statements reported properly, periodically, end of the month, end of the year. So to do that, let’s go to our loan amortization table over here and think about how we would do that.
04:07
So you can see that we’re on the second payment right here that 69 878 13 tying out to the 69 878 13. For this second loan, what we want to do is break out the short term and long term portion. So what I’m going to do is I’m going to say I’m going to assume that there’s going to be 12 payments from that point. So I’m going to say 123. And let’s bring that on down to 12, which is keep counting with the autofill down here to 12, counting up to 12. So there’s going to be our ending point at this point, after a year has passed. We’re going to be here and that’ll be that the balance will be at the 56 769.
04:46
Now if you’re saying what should the short term portion be your first thought would be? Well, it should just be simply this this amount that I’m going to pay each period because I paid the same amount times 12 And that would be 16 304 75. But that’s not quite right, because although you’re kind of committed to you’ve made a commitment to pay that amount, some of that is including interest. And the reason interest is not going to be included is because it’s just similar to you basically making a an agreement to pay for the rent of the office building.
05:18
The fact that you made an agreement to pay for the rent of the office building does not mean you have a liability today, for future payments that you have agreed to make, even though you’re tied in locked in, in essence to making them because you have not yet incurred the liability through the use of the office building. The same is true with the interest, although we’re going to agree to pay this and we’re going to pay this interest because we have a contractual agreement, we have not yet incurred the interest because we have not used the money for that time period similar to renting in order to generate revenue and whatever we’re going to do with it.
05:51
And therefore that portion is not going to be part of our the portion that we’re looking at, what we are looking at then is just going to be the the principal portion. So it’s going to be equal to the sum of these items. Now this is a little bit more confusing, because of course, the principal portions change, I can’t just take one number times 12, I got to add up 12 of these. And that brings us to the 13 108. That’s going to be the short term, actually, yes, the short term portion.
06:21
So the long term portion is going to be this minus this. And that’s going to be the 56 right here. 56 769, which is the long term portion. So the adjusting entry we need because we have everything currently in a current in a current liability is is to decrease because we got this and a current liability, decrease it by this, and then put this into a long term portion. In other words, going back to QuickBooks, we need to this is that this is a liability. So this is a credit balance account. So we’re going to debit it by that long term portion portion, leaving the short term portion still here, make another account, which is going to be a long term liability account.
07:03
So let’s first do this, I’m going to do this, we’ll see the journal entry we’ll see the debits and credits. But let’s actually do it with registers here. So I’m going to go to the list strop down and the chart of accounts. And then we’ve got our register, I’m scrolling down to the liabilities, which I went too far, you’ve gone too far, you’ve gone too far. This time. There’s the loan payable, let’s make another account called long term loan payable by going to the account drop down, rise up, it’s actually a rise up thing new, and it’s going to be a loan account. And I’m going to say continue.
07:38
And we’ll pick it up. And notice when I say loan account here, it puts it automatically into other current liability, I don’t want it there, I want it into long term liability long term liability. And I’ll just call it loan payable. Now, if I had multiple loans with a short term and long term portion, I would do the same thing I did with a short term, I would have a loan payable parents account, and then multiple loan payable accounts underneath it. Let’s actually do that. I’ll make this the parent account and say save it, save it and close it. This name already exists, let’s call it long term loan payable long term. How about that? That doesn’t exist, does it?
08:16
Because it’s a different category, QuickBooks, you should know that. So then we’re going to say here, this chase loan, Chase loan to 719. So I’m going to put that underneath I’m going to make another one and say New Account, it’s going to be a loan continue. And I’m going to call it she’s loan to 719. I’m going to make it a long term liability. And I’m going to put it into sub account under the loan payable long term. So there we go. There we have it. Hopefully I got the number right. I think that was right. Do you remember that’s the number isn’t it? Yeah, I got it, right.
08:58
Save it and close it. So let’s just just double check it here. So we’ve got two 7x is 2791. Okay, so I’m going to change it to 791. It’s not really mad, it’s just an example problem. But let’s do it right 2791. You got to you got to have the the numbers right. And they have to be in the right order. You got to do both of those things. You just can’t You can’t just have the numbers, right, and then they’re not in the right order. That’s not good enough. That’s not good enough.
09:29
So then we’re going to double click on the chase loan here, Chase loan. Let’s minimize this. And this is going to be an adjusting entry as of let’s say Oh 228 to two because it’s the end of the month. And we’re going to say we need a decrease here for the amount of this is lesson 567695956769595676 9.59 and the other side’s going To go to loan is going to go to the chase loan payable long term. And this is going to be a DJ entry to break out short term and long term, or Shawn.
10:17
That’s good. So there it is. So there and there, and I put it as an increase, I went the wrong way, hold on a second. That’s because that’s usually whether someone, I’m going to cut that with a let me and then it’s needs to be a decrease a decrease. That’s what we’re looking for. You have changed, do you want to? Yes, I do. So there it goes. Now now the ending balances at the 13 10854. And that should match over here 13 10854. And so that looks like it’s doing what we want it to, if I double click on it, that will take us to the journal entry.
10:53
So there’s the G, the journal entry, which is a debit to the loan payable here and a credit to the loan payable long term, I’m going to copy my memo and put it on both sides here, save it and close it, memo copied. Copy the memo, roger that, roger that, copy out, copy complete. So then if I go back to the balance sheet, we can see then now we’ve got the 5000. And we’ve got the 13 108 54 on the short term, which I can collapse into simply loan payable for that for the current liabilities. And then on down here, we’ve got the long term loan payable, which just has that one of the 56 769 59.
11:38
And we did that collapsing thing, in case we have other loans that are going to go in there. And we can do the same kind of portion allowing us to easily take and tie them off to the amortization tables. Obviously, if we go into it, we will then see our ad J adjusting journal entry right there. It’s a journal entry, we put it directly into the register. So if I go into the register, there’s the register, if I want to see the debits and the credits, we can go into the debits and credits.
12:06
There they are to closing this out and closing this out closing this out, we can then say this is where we stand with the trustee t to the be trial balance at this point in time. If we wanted to see what our adjusting entries were, we can go to the reports drop down accounting and taxes, take a look at the journal, the journal as of Oh 228 to 202 2008 to two. This has all the stuff in it, I’m going to go to the customization.
12:38
We’re going to then go to the type down below. We want to see the type and this is going to be the actually I’m going to the filter the filters here filters and then down to the type transaction type. And then we just want to see the journals, the journal entries and say okay, so there we have our journal entries in the last one we just did was right there so we could see all of our journal entries on this report pretty nicely pretty succinctly and in in one place. There