GnuCash: how to enter the purchase of a corporate bond with accrued interest

[Alice Lee]

The accrued interest is not an expense.  It is a receivable which will be
zeroed out when the interest is received.  The balance is income.

-----Original Message-----
From: gnucash-user
[mailto:gnucash-user-bounces+alee212007=satx.rr.com at gnucash.org] On Behalf
Of Larry Evans
Sent: Friday, February 27, 2015 10:16 AM
To: gnucash-user at lists.gnucash.org
Subject: Re: GnuCash: how to enter the purchase of a corporate bond with
accrued interest

On 02/26/2015 05:41 PM, Wm wrote:
> Thu, 26 Feb 2015 08:06:12 <mcn98l$966$1 at ger.gmane.org>  Larry Evans 
> <cppljevans at suddenlink.net>
> 
>> On 10/21/2010 06:04 AM, Christopher Singley wrote:
>>> On Thu, Oct 21, 2010 at 12:36 AM, JDDomine <jddbusiness at juno.com> wrote:
>>>> I have not figured out how to enter the purchase details of a 
>>>> corporate bond with accrued interest.  If the interest is rolled 
>>>> into the purchase price, it would erroneously affect any capital 
>>>> gains calculation if / when the bond is sold or called.  How can 
>>>> this be handled with GnuCash??
>>>
>>> Accrued interest doesn't increase your cost basis; it is interest 
>>> expense.  You report it to IRS as a negative number on Schedule B, 
>>> where it should offset items of interest income coming in on 
>>> f1099-INT.
>>>
>>> You can book it as two separate transactions - one for the 
>>> securities purchase, and another for the payment of interest.
>>
>> To see if I understand correctly, I've provided screenshots of a 
>> simple account tree, the Bond asset account ledger, and the Bond 
>> interest income account, and the corresponding irs Schedule B.
>>
>> Do these screenshots accurately reflect what you've said above?
> 
[snip]
> I think you've got the purchase of the accrued interest (an expense) 
> and the interest you receive (income) the wrong way around. You should 
> have an expense (negative income) when you buy the interest portion 
> and actual income when you receive interest.
> 
> So if your purchase was 103 (100 + 3) and you received 5 interest your 
> net interest income account should show 2.

But that sounds just like what I have.  Notice that in the 'Bond Interest'
transaction register, on 2014-06-01, under the Charge column, there's a 5
and in the Balance column, there's 5.  My preferences were
Edit->Preferences->Accounts->Reversed Balanced Accounts=None.  When I
changed that to
Edit->Preferences->Accounts->Reversed Balanced Accounts=Income & expense
the Balance column showed -5 instead of the previous +5 and in the same
register, on 2014-12-31, the Balance column showed +5 (my original example
used 5 instead of your 3).

So, as far as I can tell, the only difference between you example and mine
(besides your 3 for accrued interest instead of my 5) is the
Edit->Preferences->Accounts->Reversed Balanced Accounts value.

Am I missing something?

-regards,
Larry

this to Edit->Preferences->Accounts.None.
[snip]

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