Importing from Quicken

[Charles Day]

On Mon, Mar 3, 2008 at 8:07 PM, Steve <zephod at cfl.rr.com> wrote:

>
> ---- Charles Day <cedayiv at gmail.com> wrote:
> > On Sun, Mar 2, 2008 at 6:05 PM, Ian Lewis <ianmlewis at gmail.com> wrote:
> >
> > > Steve,
> > >
> > > What I think Charles was trying to say is, If there is a standard
> practice
> > > where you can record stock shorting using standard double-entry
> bookkeeping
> > > then yes. If not then no.
> > >
> >
> > Yes, that's what I meant. Am I right in assuming that there isn't a
> GnuCash
> > druid which guides the user in recording shorts and covers?
> >
> > I'm not an expert so I'm not sure how you might do it, but my hunch is
> that
> > > you can record these using standard double entry accounting. If
> someone
> > > knows how to do this the or has a good way of recording shorted stocks
> then
> > > please chime so we can update the wiki and/or documentation.
> > >
> >
> > I'll take another crack at this... When you short a stock, you are
> selling
> > borrowed stock. So you have an asset (the sale proceeds) paired with a
> > liability (the shares you owe to your broker). Whether you actually
> receive
> > the cash right away doesn't matter. Your broker owes you the proceeds of
> the
> > sale (that's your asset, much like A/R), and you owe your broker the
> shares
> > (that's your liability).  When you later do the cover, you buy the
> shares
> > using the asset account and deposit them into the liability account. The
> > difference is your profit, which is a transfer from an income account
> > ("Realized shorts", perhaps).
> >
> > How does that sound?
>
> OK. I think I've got it and yhis is what I tried to do to start with but I
> screwed it up somehow. I have 3 accounts: (A = Assets, E = Expense)
>
> A:Brokerage Account
> A:Brokerage Account:ABC stock
> E Account:Brokerage Account:Commisions
>
> In the brokerage account I put this transaction:
>
> Description____________________________|_Deposit_|_Withdrawal
> Short_Sell_100_ABC____________________|________|___________
> _______________A:Brokerage_Account_____|_4990.0_|___________
> _______________E:Commision____________|___10.0_|___________
> _______________A:Brokerage_Account:ABC_|________|_5000.0_
>
> and the corresponding ABC account looks like this:
>
> Description____________________|_Shares_|_____|__Buy___|__Sell_|_Bal_
> Short_Sell_100_ABC____________|_-100___|_____|________|__100_|_-100
> _______A:Brokerage_Account_____|_______|_____|_4990.0 _|______|_____
> _______E:Commision____________|_______|_____|___10.0_|______|_____
> _______A:Brokerage_Account:ABC_|_-100__|_50.0_|_______|_5000.0_|___
>
> Now to cover the short I put this transaction in the Brokerage account:
>
> Description____________________________|_Deposit_|_Withdrawal
> Buy to cover 100 ABC___________________|________|__________
> ______________A:Brokerage_Account_____|_4490.0_|__________
> ______________E:Commision____________|___10.0_|__________
> ______________A:Brokerage_Account:ABC_|________|__4500.0__
>
> and the corresponding ABC account ends up like this
>
> Description____________________|_Shares_|_____|__Buy__|___Sell__|_Bal_
> Short_Sell_100_ABC____________|__100__|_____|___100_|________|___0
> ______A:Brokerage Account______|_______|_____|_______|_4490.0 _|___
> ______E:Commision____________|_______|_____|___10.0_|________|___
> ______A:Brokerage_Account:ABC_|__100__|_45.0_|_4500.0_|________|___
>
> So I sold short 100 shares of ABC stock at 50.0/share with a commision of
> 10.0 which deposited (100 * 50.0) - 10.0 = 4990.0 into my brokerage
> account leaving -100 shares in the ABC account.
> I then covered the short at 45.0/share with a commission of 10.0 which
> removes (100 * 45.0) + 10 = 4510.0. from the brokerage account and leaves
> a balance of 0 in the ABC account.
> This gives me a realized gain of 4990.0 - 4510.0 = 480.0.
>
> Does that look OK?
>

The short seems OK except that the short sale proceeds shouldn't actually
add to the cash balance of your brokerage account, since you haven't
actually been paid by your broker yet. Instead, you need a separate asset
account, say "Assets:Brokerage Account:Shorts" that represents the amount
owed to you. So you'd have:

Description_______________________|_Shares_|______|__Buy___|__Sell__|_Bal_
Short_Sell_100_ABC________________|__-100__|______|________|___100__|_-100
_______A:Brokerage_Account:Shorts_|________|______|_4990.0_|________|_____
_______E:Commision________________|________|______|___10.0_|________|_____
_______A:Brokerage_Account:ABC____|__-100__|_50.0_|________|_5000.0_|_____

Now you have an asset worth 4990.0 and you owe 100 shares worth 5000.0, for
a net loss of 10.0 (the commission). That makes sense to me.

For the cover, the amount coming out of the shorts account should be the
4990.0 from the sale. The first four split lines show that from that 4990.0,
10.0 is spent on commission, 4500.0 is spent to buy the shares, and the
remaining 480.0 gets deposited to the brokerage account. Then the capital
gains are accounted for in the last two lines, similar to the example shown
in the GnuCash Tutorial and Concepts
Guide<http://svn.gnucash.org/docs/guide/invest-sell1.html#invest-sellexample2>
:

Description_______________________|_Shares_|______|__Buy___|__Sell__|_Bal_
Buy_To_Cover_100_ABC______________|___100__|______|___100__|________|____0
_______A:Brokerage_Account:Shorts_|________|______|________|_4990.0_|_____
_______E:Commision________________|________|______|___10.0_|________|_____
_______A:Brokerage_Account:ABC____|___100__|_45.0_|_4500.0_|________|_____
_______A:Brokerage_Account________|________|______|__480.0_|________|_____
_______A:Brokerage_Account:ABC____|_____0__|____0_|__480.0_|________|_____
_______I:Capital Gains____________|________|______|________|__480.0_|_____

Keep in mind that I'm not an accountant. Consider this my best guess! (If
the columns in these examples don't line up, try viewing them with a
fixed-width font such as Courier New.)

Cheers,
Charles

I hope you can read this OK
>
> Steve..
> >
> > -Charles
> >
> >
> > > Ian
> > >
> > > 2008/3/3, Steve <zephod at cfl.rr.com>:
> > > >
> > > >
> > > > ---- Charles Day <cedayiv at gmail.com> wrote:
> > > >
> > > > > On Sun, Mar 2, 2008 at 2:08 PM, Richard Ullger <
> rullger at ntlworld.com>
> > > > wrote:
> > > > >
> > > > > >
> > > > > >
> > > > > > Charles Day wrote:
> > > > > > >
> > > > > > > That is a good question. I have not tried to enter shorts or
> > > > covers in
> > > > > > > GnuCash. Off the top of my head, it seems like you would need
> a
> > > > > > "Borrowed
> > > > > > > Shares:Security Name" liability account for which the
> underlying
> > > > > > "commodity"
> > > > > > > (GnuCash term) is the security being sold short. Transfer
> shares
> > > > from
> > > > > > that
> > > > > > > account into your portfolio and immediately sell them. That
> would
> > > > be the
> > > > > > > short, leaving you with the cash you got from the sale plus a
> > > > liability
> > > > > > of
> > > > > > > the borrowed shares.  For the cover, buy shares for the
> liability
> > > > > > account.
> > > > > > >
> > > > > >
> > > > > > When you short shares, your broker borrows the shares on your
> behalf
> > > > and
> > > > > > sells them. You do not actually realise any cash for the sale so
> you
> > > > do
> > > > > > not have that cash to go and buy more shares. When you buy to
> cover
> > > > you
> > > > > > receive the difference between the sale and the cover if there
> was a
> > > > > > gain or your account is debited with the difference if there was
> a
> > > > loss.
> > > > > >
> > > > >
> > > > > Ah, yes, I had forgotten how that worked. Had I actually gotten
> around
> > > > to
> > > > > shorting ANF a few days ago as I had planned, I would have known
> > > > better. :(
> > > > >
> > > > > Anyway, I'm sure there must be a fairly standard way of recording
> this
> > > > type
> > > > > of transaction in a double-entry accounting package. If there is
> not
> > > > already
> > > > > a GnuCash druid/wizard to drive the process, then that would be a
> nice
> > > > > enhancement.
> > > >
> > > >
> > > > Err.. I'm still not clear on this. Does GC 2.2.3 in fact support
> > > > shorting stocks.
> > > >
> > > > Thanks,
> > > > Steve
> > > >
> > > > _______________________________________________
> > > > gnucash-user mailing list
> > > > gnucash-user at gnucash.org
> > > > https://lists.gnucash.org/mailman/listinfo/gnucash-user
> > > > -----
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> > > >
> > >
> > >
>
>