Year End Mutual Fund Dividends - Simulating Receivables for Personal Account

[Suresh Bazaj]

Hello Robin,

 

            Your recommendation is right on the spot for filing 1040 and corresponding State individual/joint returns.

 

            I just started (I am Newbie) using GNUcash to maintain books for a trust where the yearend “cash balance” in various accounts must match the balance reported on yearend (Dec) statement. Hence the need for the extra contortion.

 

Thanks,

 

Suresh

 

From: Robin Chattopadhyay [mailto:robinraymn at gmail.com] 
Sent: Tuesday, May 10, 2016 3:05 PM
To: Suresh Bazaj
Cc: gnucash-user
Subject: Re: Year End Mutual Fund Dividends - Simulating Receivables for Personal Account

 

I would just enter the dividend transaction into your account using the ex-date as the transaction date. The fact that the cash is not yet in your brokerage account is, then, a reconciliation difference during the period between the ex-date and the payable date.

There's another benefit to doing it this way besides matching your 1099-DIV... If you're not entering the dividend until you have it in your brokerage account, your Balance Sheet will be understated because -- it's especially noticeable for a mutual fund at the end of a year -- the price of the mutual fund is reduced by the per share amount of the dividend.  So, in your case, if you have a 0.15 USD/share dividend that went ex- on 12/31 and is payable 1/2, then your market value is short by that $0.15 if you run a balance sheet as of 12/31.

 

Robin

 

On Mon, May 9, 2016 at 9:35 AM, Suresh Bazaj <suresh at bazaj.org> wrote:

I am trying to figure out how to enter year end Dividends that are accrued
on the last day of a year but deposited into the account on second (T+2)
business day of the new year.



The 1099-Div includes this as income in the prior year though the money is
deposited in the Brokerage Money Market account in the new year.



Creating Receivables account type for the few onetime transactions at the
beginning of each year seems like an overkill.



So, I created a sub-account named "Receivable" under Assets (Top Level
Parent Account) and a sub-account "Receivable Opening Balance" under Equity.



I then made an entry for each Dividend amount using Transfer Type Equity:
Receivable Opening Balance.



I then made a second entry on the day the Dividend was posted/deposited in
the Brokerage Money Market account. For this I used Transfer Type Assets:
Brokerage Money Market Checking.



This seems to work. The Receivables subaccount under Assets is now Zero and
the Dividends are in Brokerage Money Market Checking Accounts under Assets.



The Receivable Opening Balance under Equity continues to show the total of
all such Dividends.



Am I on the right track?



It will be pretty painful, if I have to change all this after I have entered
rest of the transactions (few hundred) for rest of the year.



Thanks,



Suresh

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