Super simple example:
- You take a loan out in January of $50,000.
- $10,000 principal + $1,000 interest of the loan will be due back over the course of the 12 months ending the year
If you were making a balance sheet to reflect this, should short term notes payable include interest? I'm finding conflicting advice on this. In my head if I DON'T include interest, the balance sheet makes a lot of sense, it looks like this:
Cash 50,000 Short Term Notes Payable 10,000 Long Term Liabilities 40,000
It balances. If however, interest IS included, then how does the $1000 interest balance out? I.e., this is off balance below
Cash 50,000 Short Term Notes Payable 11,000 Long Term Liabilities 40,000