How to Determine a Company's Total Debt on a Balance Sheet
Liabilities are a company’s debts, or the amount of money it owes other parties, such as lenders or suppliers. When you list liabilities on your small business’s balance sheet, you separate them into two subsections: current liabilities and long-term liabilities. Current liabilities are those that you expect to pay within one year. Long-term liabilities are those you expect to pay after a year. The amount of your small business’s total liabilities, or total debt, you must report on your balance sheet equals the sum of your current and long-term liabilities.
Determine from your accounting records the amount of your current liabilities, such as accounts payable, wages payable, short-term notes and the portion of long-term debt due within one year. Also, include money you have already received from customers for which you have not yet performed services, called unearned revenue. For example, assume your small business has $50,000 in accounts payable, $20,000 in short-term notes and $5,000 in unearned revenue.
List each item and the amount in the current liabilities subsection of the liabilities section on your balance sheet.
Calculate the sum of your current liabilities, and list the total at the bottom of the subsection. In this example, add $50,000, $20,000 and $5,000 to get $75,000 in total current liabilities. List $75,000 at the bottom of the subsection.
Determine from your records the amount of your small business’s long-term liabilities, such as long-term notes and bonds payable. Continuing with the example, assume your small business has $70,000 in long-term notes and $15,000 in bonds payable.
List each item in the long-term liabilities subsection of the liabilities section on the balance sheet.
Add together your long-term liabilities and list the total at the bottom of the subsection. In this example, add $70,000 and $15,000 to get $85,000 in total long-term liabilities. List $85,000 at the bottom of the subsection.
Add together your total current liabilities and total long-term liabilities to determine your total liabilities. Then list your result at the bottom of the liabilities section. In this example, add $75,000 and $85,000 to get $160,000 in total liabilities. List $160,000 at the bottom of the section.