How does a debt schedule work?
A supporting schedule tracking each loan's balance, payments, rate, and maturity. It sits behind the statements, not as a line on them.
Definition
A debt schedule is the worksheet that tracks every loan the shop still owes. On the books, this is support sitting behind the loan lines, not a line you post to.
Each row is one note. Anyone reading the statements should be able to see balance, rate, payment, and maturity for each lender.
A glass studio uses it so a kiln note and a van note do not blend into one lump. The Balance Sheet shows totals; this list shows the pieces.
Where it shows up
Balance Sheet: Related to the loan lines this schedule supports.
P&L: Related to interest each period.
See also: Notes Payable · Loan Amortization Schedule · Supporting Schedule
When you look at your Balance Sheet, you will not find this schedule as a line. It sits behind Notes Payable and any current slice of those notes.
The profit and loss statement does not list the schedule either. The related amount is this period's interest, which should match the rows for the period.
A close binder or a shared spreadsheet is where the schedule usually lives. It is working paper, not a general-ledger account.
A high remaining-balance total can mean recent borrowing or long maturities. A list that is mostly small leftover rows can mean older notes that are nearly paid.
How it works
A typical path starts when you borrow. You add a row with the lender, original amount, rate, payment, and maturity, and you keep that row until the note is paid off.
Each period, you read the schedule to see what is due. The Loan Amortization Schedule for that note is what splits the installment into a Principal Payment and interest.
Stay with this worksheet: it is the source for those amounts, not the entry itself. The note account still holds remaining principal, and the P&L holds the interest cost.
If you add a new loan, you add a row. If you pay one off, you take the row off after the last payment so the list still agrees to the books.
The next twelve months of principal on the rows is how you size Current Portion Of Long-Term Debt. The rest of each balance stays longer-term.
A covenant, if the loan has one, can live as a note on the same row. Missing one does not by itself change the schedule math; it can put the remaining principal at risk of being called early.
Do not let the schedule drift from the notes the shop actually owes. A loan on the books with no row, or a row with no loan, is how the statements stop tying out.
The period's interest on the P&L should equal the sum of this period's interest column. The stacked loan lines on the Balance Sheet should equal the sum of remaining principal on the rows.
Example
A glass studio has a $24,000 kiln note at 6 percent and a $12,000 van note at 5 percent. The debt schedule holds one row for each lender, with payment, rate, and maturity filled in.
This month the kiln row says $400 of the installment is principal. That row is how the studio sizes the pay-down.
At month end the studio records the principal the schedule called for:
Debit: Notes payable $400
Credit: Cash $400
The kiln note falls by $400, and cash falls by $400. The Income Statement has not taken a $400 expense.
The schedule now shows $23,600 remaining on the kiln row. Interest on that installment is recorded on its own, from the same row's interest column.
The van row is untouched this story. Two loans stay two rows, so the Balance Sheet total still has a proof.
Common mix-ups
A debt schedule is not Notes Payable. The note is the Balance Sheet account; the schedule is the worksheet that supports it.
A debt schedule is not a Loan Amortization Schedule. That other worksheet splits one loan's payments into principal and interest; this list is the portfolio of every note.
A debt schedule is not a Balance Sheet line. You will not find it between assets and equity; you find it in the close file behind the loan totals.
Related terms
- Notes Payable: Formal loan balances owed to a bank or other lender.
- Loan Amortization Schedule: The payment-by-payment breakdown of a loan into principal and interest.
- Principal Payment: The portion of a loan payment that reduces the balance owed.
- Interest Expense: The cost of borrowing recorded for the period.
- Covenant: A condition in a loan agreement the borrower must keep meeting.
- Current Portion Of Long-Term Debt: The slice of loan principal due within the next twelve months.
- Supporting Schedule: A detailed worksheet backing up a single line on the financial statements.
- Debt Service Coverage Ratio: Cash available to cover scheduled principal and interest payments.