Investment Distribution

[MartyMouse]

I am a new user of PC+ (and to accounting) and need help accounting for an investment distribution. The investment is an asset within our general fund as is our checking account. We deposited the investment distribution check (asset: credit) into our checking account (asset: debit). We have an 'Investment Income' income account that closes to 01-3110-000 (unrestr. net assets). I would like to credit that account but I do not know what to debit.

Thanks

Marty (UMC Maine)

[NeilZ]

I am a new user of PC+ (and to accounting) and need help accounting for an investment distribution. The investment is an asset within our general fund as is our checking account. We deposited the investment distribution check (asset: credit) into our checking account (asset: debit). We have an 'Investment Income' income account that closes to 01-3110-000 (unrestr. net assets). I would like to credit that account but I do not know what to debit.

Thanks

Marty (UMC Maine)

When you deposited the money what accounts did you use ?? I'm going to assume that this was a dividend distribution.

You should have debited the checking account, but credited the investment income account. This automatically adjusts the unrestricted net assets account.

If you were adding money to the investment, you would then credit checking but debit the investment as you were increasing the investment.

[MartyMouse]

Thank you for your reply. I have credited the investment asset and debited the checking account into which the investment income was deposited. I would like to have the investment income show up in my budget report. To do this I know I need to credit my 'Investment Income' income account (01-4512-000). What I need to know is which additional account or account type to debit.

Thanks,

Marty

[NeilZ]

Thank you for your reply. I have credited the investment asset and debited the checking account into which the investment income was deposited. I would like to have the investment income show up in my budget report. To do this I know I need to credit my 'Investment Income' income account (01-4512-000). What I need to know is which additional account or account type to debit.

Thanks,

Marty

Marty, you didn't answer the question ... was this a REDEMPTION of your investment, that is, did you CASH IN any of the original investment??

If not, you should NOT have credited the investment asset, but credited the investment income.

[MartyMouse]

The deposit was income from an investment, not sale of the investment. It is clear from what you wrote that I should credit my investment income account and debit my checking account.

Thanks,

Marty

[stmarys]

A followup question to this post. We receive monthly dividends that are automatically reinvested each month. I credit my investment income account and debit my checking account, then credit the checking account and debit the investment asset account. My problem is that the income shows up on my Income & Expense Statement with no corresponding expense, skewing my income for the month. The dividends are recorded as income but the reinvestment is recorded in the asset account. How can I reflect the expense or remove the income in the Income and Expense Statement?

[NeilZ]

A followup question to this post. We receive monthly dividends that are automatically reinvested each month. I credit my investment income account and debit my checking account, then credit the checking account and debit the investment asset account. My problem is that the income shows up on my Income & Expense Statement with no corresponding expense, skewing my income for the month. The dividends are recorded as income but the reinvestment is recorded in the asset account. How can I reflect the expense or remove the income in the Income and Expense Statement?

You should have an Unrealized Gain (Loss) account setup in the system.

Here is something that John Meyers wrote up as an answer to someone who asked about stock values. This works for stocks and mutual funds. Its what I use at my church:

Here's how we do it:

If the investment is in 01-1310-000, then ADD
01-1312-000 Unrealized Gain (loss) - (detail asset, level 5)
01-4950-000 Unrealized Gain (loss) - (detail income, level 4, closes to 3110 unrestricted)

Assume a balance of $12,000 in 01-1310-000 and a market adjustment of $780.00 for a given month:
DB 01-1312-000 $780.00
CR 01-4950-000 $780.00

If the amount is a loss, simply reverse the DB and CR on the above accounts.

The reinvestment income should not be listed as actual 'income' since there is nothing that is coming directly in to the church.

[stmarys]

I use unrealized gain/loss to record changes in market value of the original investment. My question is not about a change in market value, but a dividend that is deposited in a checking account (actual money) and then we make the choice (albeit automatically) to deposit it into the investment account and purchase more investments. Doesn't this make it an actual gain, not an unrealized gain?

[NeilZ]

I use unrealized gain/loss to record changes in market value of the original investment. My question is not about a change in market value, but a dividend that is deposited in a checking account (actual money) and then we make the choice (albeit automatically) to deposit it into the investment account and purchase more investments. Doesn't this make it an actual gain, not an unrealized gain?

I misread that ... most investments can be setup so that any dividends are automatically reinvested without having to go through the issuance of a physical check, then an issuance of another check to invest back.

I've done some major searches in the forum, and have not found any threads that are close to what you are actually doing. There are many that will take normal Tithes & Offerings income, and set aside a budgeted expense account to put into investments, but I have not found any that gets the check, then turns around and reinvests it (I'm assuming with the same firm/mutual fund/whatever) back into the investment.

May not be a bad idea to check with a local accountant, perhaps someone in your church, or one that another church could recommend for advice.

[belen@horizonelp.org]

Is there a reason why you use the 4950 account? I am adding an "Unrealized Gain (Loss)" account to our chart of accounts. Our chart of accounts was originally set up with the 4900 being a group, level 3 account for our permanently restricted release. So for us, it doesn't make sense to use the 4950. What is the group header for your 4950 account?

Belen Briones
HCF

[NeilZ]

Is there a reason why you use the 4950 account? I am adding an "Unrealized Gain (Loss)" account to our chart of accounts. Our chart of accounts was originally set up with the 4900 being a group, level 3 account for our permanently restricted release. So for us, it doesn't make sense to use the 4950. What is the group header for your 4950 account?

Belen Briones
HCF

Belen,

FWIW .. the number you use within the 4000 series is really up to the user. The initial setup wizard will use default numbers, but you can change it to suit your situation.

[belen@horizonelp.org]

Ah! Got it! Thank you so much!!