How do I record a maturing treasury note that is reinvested?

John K. Taber jktaber at charter.net
Sun Apr 1 09:35:52 EDT 2007


I have a two year US Treasury note that has matured, and that will be
immediately reinvested in another two year note. The note is held by
Treasury Direct, a US Treasury agency that is a cheap way to buy and
keep treasuries, on my behalf.

The transactions are not simple.
* final semi-annual interest is paid to my checking account
* the principal is virtually returned, but not actually to my checking
account. The remittance to the bank says PAR and INT for that CUSIP, but
only the interest is deposited.
* On April 2, most of the principal will buy the Note maturing Mar 31,
2009. Since there is a difference between the face interest rate
(4-1/2%) and the actual, not all the principal will be used, thus
adjusting the effective interest rate to market.
* A small portion of the matured principal that wasn't needed for the
new note will be returned to me by being deposited in my checking
account.

Question: How do I record a matured bond? In Quicken I simply used a
Sell transaction code, and commented that the bond had matured. But
should it not be return of capital? Then I recorded the purchase of the
new bond at the actual price, and the small return as Xout (money
transfered to my checking account from Treasury Direct). I have no idea
if that is the right way of doing things. It just worked for me in
Quicken.

I would appreciate any help.

I am using GnuCash 1.8.9 on FC3.

John





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