Interest Received Part 3

Quick reference

• 00:04 Returning to interest received, having calculated the interest receivable last
• 00:09 time out, we've now got to actually put together the control account.
• 00:14 So we calculated the interest receivable here in mode 249,
• 00:17 and it was that nice simple formula, which, yes, it's probably not going
• 00:21 to win us any simplicity awards, but it's the right formula all the same.
• 00:26 And sometimes that's just the price you pay modeling,
• 00:28 you have to have a horror formula like that.
• 00:31 Now, the closing interest receivable.
• 00:34 If you have a look at the balance sheet, we don't have an interest receivable,
• 00:37 we have interest payable.
• 00:39 And actually, we've already included that interest
• 00:43 payable is done in the debt section up here.
• 00:45 So if we were to put those numbers in a second time,
• 00:48 we'd end up with a double count.
• 00:51 So we're not gonna put anything here,
• 00:53 we're actually gonna cell style instead as an empty cell thing.
• 00:56 Now, we notice it's blank.
• 00:58 Then the opening interest receivables previous split closing balance,
• 01:03 press Enter, copy that across.
• 01:06 The closing interest receivable is Alt = the sum of the three rows above.
• 01:10 Go Copy, Ctrl+C, and enter these paste special formulas.
• 01:16 My interest income, I have just wrote it out in row 249 equals this.
• 01:22 Copy that across.
• 01:23 And my interest received is equal to the previous
• 01:27 period's opening balance equals minus that copied across.
• 01:32 Now, don't be put off by the fact they're all negative.
• 01:34 That just means to be an overdraft at this point in time.
• 01:37 But we'll still follow the same principles we always do with the control account.
• 01:41 There are four lines in this control account therefore,
• 01:44 that means we've got four minus one is three, calculations to do.
• 01:48 The interest income goes into the income statement as a positive number.
• 01:54 The interest received also goes into the income statement as a positive number.
• 01:59 So we have to negate the sign here,
• 02:01 whereas closing interest receivable goes into the balance sheet as a negative
• 02:05 number because we're going to off set it against the interest payable balance in
• 02:10 the liability section of the balance sheet.
• 02:12 So let's go do it, we've got three of these to do.
• 02:15 So first up, interest income comes in here, equals.
• 02:20 Well, it's minus the interest expense plus,
• 02:24 add to calculations, bring in this number, and copy it across.
• 02:29 Soon as we do this, it no longer balances.
• 02:33 Cash Flow Statement is going to be interest received, goes in this line here.
• 02:38 Equals minus, cuz it should be a positive number, whereas a positive number,
• 02:42 it should be the opposite of what it is in the calculation sheet for sure.
• 02:46 That's going to be this number here.
• 02:48 So it is going to be negative, because with the fact, we were overdrawn.
• 02:52 And finally, on the balance sheet, we want to go down to interest payable.
• 02:56 Now we've got this interest receivable we're calculating.
• 02:58 We're actually going to have to deduct this one, as we're going to offset them.
• 03:02 So we're going to go in here, offset against this, and copy that across.
• 03:10 As soon as we do that, the balance sheet balances.
• 03:13 Congratulations, we've finished.
• 03:15 We've put together our horror interest received, and
• 03:19 we can move on to the next item, all good.

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