How do you journalize and adjust entries for $30,000 of notes payable that are due for payment next year?

Question

I have an excel assignment due tomorrow. My Income Statement comes out correctly given the numbers my instructor provided, but I cannot get my Balance Sheet to equal. The problem I think is my entry for the notes payable question. How do I journalize and adjust entries (if needed) for $30,000 of notes payable that are due in the next year? Thanks in advance for any help.

Answer 1

It's just as well you said your income statement was correct cos I was about to ask you if you'd accrued for the notes interest. If that's all done, I don't see why your balance sheet doesn't balance. It's only a matter of presentation. Is the $30,000 all you have in notes payable? If that's all, then the whole amt should be in Current Liablilities. If your total is, say, $300,000 and $30,000 is due next year, then you only need to shift $30k from long term to current, leaving $270k in long term notes payable.

Answer 2

The 30,000. note payable, if due within a year, should be listed as a current liability.

If there is a balance on the note:

Whatever the total amount of the note payable is, the 30,000. is subtracted away, and the balance would be listed as a long term liability.

If you have listed the 30,000. as a current liability, and have not deducted it form the total amount of the note due under long term liabilities, the balance sheet will not be in balance.

I hope this helps.