How to Calculate a Note Payable

Jupiterimages/Brand X Pictures/Getty Images

A note payable is an amount that your company owes a credit. The note payable only takes into account the principal of the loan. It does not include any interest. As you pay off the principal on the amount borrowed, you will reduce your notes payable. The notes payable is in the liabilities section of the balance sheet. If you will pay off the principal in less than a year, it is in current liabilities. If it takes more than a year, it is a long-term liability.

Find the amortization table for the note payable. Each time you take out a loan, the bank should provide you with an amortization table. The amortization table will show total principal paid off up to each payment.

Find the current payment on your amortization table. For example, if you made 13 payments then go to the 13th payment row. Pick out the principal paid from that row. In the example, assume your principal paid is $20,000

Subtract the principal paid from the original amount borrowed. In the example, assume you borrowed $200,000, so $200,000 minus $20,000 equals $180,000 of notes payable remaining.

Tips

  • If you do not have an amortization table, your bill for the note payable may have total principal paid. If not, each bill should break down the payment between principal and interest, so you only need to add up the total principal paid from these bills.

References

About the Author

Carter McBride started writing in 2007 with CMBA's IP section. He has written for Bureau of National Affairs, Inc and various websites. He received a CALI Award for The Actual Impact of MasterCard's Initial Public Offering in 2008. McBride is an attorney with a Juris Doctor from Case Western Reserve University and a Master of Science in accounting from the University of Connecticut.

Photo Credits

  • Jupiterimages/Brand X Pictures/Getty Images