Accounting for Beginners #56 / Paying a Loan Back / Reducing Liabilities / Accounting 101


yo yo yo what’s going on everybody
welcome back I did not lose my mojo I just am filming this in the middle of
the day so there’s people who can’t hear me and I don’t want to get kicked out of
an office as I do the majority of my filming or early early in the morning
like three four five six in the morning when there’s nobody in this office so
basically they have no idea how crazy I am
and mmm I’d like to keep it that way a little bit anyways oh boy happy happy
joy joy I’ve listened to a lot of motivational YouTube today like
different motivational speakers and and I’m just fired up and right go it was
like and this is what I’m doing this is this is like I finally found what I like
doing which is teaching the world accounting by basic blocks and I just
love it sounds like well why don’t you film a video anyways I am CPI strength
and that’s what I do is teach the world accounting building block by building
block this happens to be your first time watching me check out this playlist over
here this car that I’m illustrating over here hey best playlist in the world make
our dreams come true I think it’s like a genie in a bottle
kind of it’s pretty much exactly like that so if you like that you’ll like
this what are we doing in number 56 keep around 56 30 and 56 we’re doing hanging
a long back 55 we got a loan anyways we’re and so we got a loan let’s see in
55 we got alone so we got money we got 10 K actually at 55 now this is number
56 we’re paying a loan back so there’s some indicators on how you would do this
but anyways how would you how would you pay
the lone back that’s what we’re going to do tonight we’re going with helping for
ICP that’s us that’s the Hat we’re going to wear the business that’s what we’re
going to do so we’re the business you’re going to today and we paid back mmm
thank you thank you to create guts and chippers payback cpa strengths they’re
both they’re both me but what you going to write this is this is us for our
problem we paid back this pay back this come
over here 5,000 the $10,000 so I change this around a little bit this is this is
my dc-8 or democratic asset draw expense line on the equity revenue this is my
wrapping system then I get that I made up with that I’m working with still
every day and teaching thousands of people accounting and I’m always
changing every day by every time I talk which is a lot so we’re going to do
internal interview for basically paying back a loan couple things you’re paying
you paying back alone that means there’s probably others are you know there’s
already a loan on the books so I would look in the chart of accounts I would
look in they say this is this is a pain pain back somebody so say well that
means I owe somebody I would look at the liabilities and see what in the chart of
accounts there is and you’ll see in the liabilities trust there’s going to be a
liability of and it’s going to take loan from CPA experience that’s going to be
pretend out $10,000 that’s what we got before so you’re going to know okay
there’s a loan there’s a liability on the books it’s alone from CPA strength
we’re paying we’re paying him back so it’s going to lower that loan amount and
I’m going to use this this this account this account and the tour of accounts
because I’m going to lower it so if I use a
whole different one I wouldn’t lower it anyways that’s what I move ahead of
myself sometimes we are going to do this journal entry and what do we know when
you we know debits equal credits alright we know that any transaction is either
going to be is either going to be in one of these six boxes any transaction that
we have is there going to be an asset drop expense liability equity or revenue
going to one of those six buckets and after we figure out which one of the six
buckets it is then you’re going to then you’re going to figure out it could take
debit or credit and how do you do that it depends really if it’s if it’s
increasing or decreasing so there’s a couple things so let’s go let’s go with
let’s go with Union if you know where I’m going first right
Dornan CPA payback secret strength $5,000 so you know you know what’s the
first thing stop what’s the first thing you think I’m going to do what do you
think there is well I know you see the journal entry but anyways what’s the
first thing there’s cash man it doesn’t say it doesn’t say catch it just has
$5,000 you’re going to have to infer that it’s cash because basically it’s
cash cat and caps equivalent cash checks money like all is all the same so we’re
just going to put you don’t have to put this here but I’m going to put it here
to make easier for maybe somebody so we that our business that’s us who are
doing this journalist for this is what hat we’re wearing the dorm CPA hat we
paid back somebody will pay back somebody $5,000
okay $5,000 cash we know cash is an asset so we figured out we figured out
here that we have cash and time we have cash we have we have cash that’s an
asset now is it going up or down as our as our cash going up or down you’re
paying back somebody that means you you have less cash I had five I had $5,000
and I paid you back so now I have well I don’t have that $5,000 so I have 5,000
less than I just had so I have less cash and if your cash was going increasingly
to be a debit our cash is decreasing so it’s going to be a credit and so it
would find its way up over here so the cat so our credit is going to be a cash
all right and how much $5,000 so if there’s our cart at $5,000 cash is our
credit we figured we know we know the cash is an asset and reason to support
our claim or our claims that white captures a credit is because you know
it’s nonsense it’s going down snow and ounces were paying somebody and
repentance would have less money so it’s going down what’s what’s our debit going
to be well first thing I would do is I’d put $5,000 in as you know debits equal
credits always always always done its equal credits I’d put that in now let’s
try to look at the problem and turn figure out what’s going on here so we
paid back we paid back CPA strength we talked about a little before it but we
paid someone back well that means we owe them something right
we paid back CJ strength let me look at let me look at my books let me look at
my balance sheet and see what’s on liabilities does it saying I pay your
back that means I want Odum so how much shell where I am so I’m
looking at my balance sheet and we had one we had one transaction where this
gentleman CJ strings actually wound us money so you loaned us $10,000 so
there’s a liability on the books under liabilities is loan from CPA strength
$10,000 so we’re going to lessen that account because think about there’s
there would be $10,000 in a liability account that means that we owe somebody
we don’t see please drink $10,000 now we paid him we paid back in strength
5,000 over $10,000 so we owe him $5,000 now and we’ve looked we know we owed him
so we know that has to be a liability so that’s a liability now this liability
account is called loan from CPA strength is this transaction making the loan is
increasing the loan amount or is it decrease in the loan amount is d keep
decreasing the loan amount because we owe him less now we know CJ strength
less now so soon would figure out you owe somebody or anything of liability
and then another it’s decreasing in a negative fashion so would be a debit
because if it was incredible at abilities increasing it’s a credit it’s
a lot it’s a liability is decreasing it’s a debit increasing credit
decreasing debit go my salute the who baby let’s do this so
anyways what’s up what’s up for this jerk
a Jenna and Trey so let’s get our debit side is going to be a $5,000 loan from
CPS strength how do we how do I support that because it’s a loan from somebody
long from that means I have to pay them back that means that the liability
the reason it’s a debit is because it’s going down we’re paying someone back and
reducing the amount owed so anyways there’s there’s a so I just
did we just did a last two videos we did getting a loan paying back loan paying
the loan back so basically all we did would reverse the journal entries kind
of thought that’s all I really did anyways I hope you like to play
ourselves instead of a bunch of motivational um motivational stuff on
YouTube and it’s just really good it seems to be all about mindset mindset
mindset Mark Cuban was on for a second he he he owns Adele
the Dallas Mavericks and he’s off he he may as my up internet or something he’s
also on what is that when you try to pitch your product shark tank these are
things like that show like this and it has up Anton Loretha have a hand with
hand I don’t know Lauri you know socially cuz
I didn’t have a Canton but he’s like you know success is if you’re having fun
doing what you’re doing and you know what I didn’t for a long long time I
used to just I I used to just wait till it gets dark so I’d go to sleep and
severe depression and now I can’t go to sleep because I’m so excited about
things anyways he’ll next time Cheers

Paul Whisler

7 Comments

  1. Good morning – do you like Quickbooks? Do you use it much? Do you prefer the online or the desktop version? Thank brother!

  2. One suggestion – Why don't you give us an exercise we can do at the end of each video and then give us the correct answer in the next video?

  3. So you have paid the principle but the interst would be handled as lets say a 2% per annum ($10K x .02=$200) Paid monthly would be $200/12= ~$16.67. So the 16.67 would be booked as 16.67 credit cash and debit 16.67 Loan Interest? Course this is before you have paid the 5K against the principle in your video.. you would have to adjust interest payments. Even if the owner never withdrew the interest payment but rolled it back into the business how would you account for the rollback. ~$16.67 credit draw and debit (not cash) ??

  4. You're so motivational. I love your insights at the end of your videos. Thank you for disclosing your depression. I have depression too.

  5. I HAVE NEVER stopped loving you, I WILL NEVER stop loving you, CPA

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