[GNC] Certificate of Deposit Early Withdrawal Penalty Account Entry

[Gyle McCollam]

I would enter this Murugan suggested. Let's say the balance of the CD prior to closing on your books was $300,000.00
 Using the amounts you have given:
                        Debit       Credit
Asset: Acct moved to    $298,633.38  (Closing Balance)
Income: CD Interest                       $162.89
Exp: Bank: Penalties          $1529.51
Asset: CD                              $300,000.00  (Balance just prior to this entry)


Thank You,

Gyle McCollam

Gyle McCollam

gmccollam at live.com<mailto:gmccollam at gyleshomes.com>           email

________________________________
From: gnucash-user <gnucash-user-bounces+gylemc=gmail.com at gnucash.org> on behalf of Murugan Muruganandam <m.muruganandam at hotmail.com>
Sent: Sunday, January 15, 2023 11:17 AM
To: Stephen <rilesthemtobelieve at gmail.com>; gnucash-user at gnucash.org <gnucash-user at gnucash.org>
Subject: Re: [GNC] Certificate of Deposit Early Withdrawal Penalty Account Entry

hi Stephen

The entries can be input as follows.  I could not understand where you are getting orphans or imbalances  if you can explain it would be easy

Account Dr      Cr      Notes
Principal       Asst: Bank Account      Asst: CD Account        $ Principal amount
Interest        Asst: Bank Account      Income: CD Interest     Interest earned + partial month $162.89
Penalty Interest        Exp: Bank: Penalties    Income: CD Interest     Total penalty $1.529,51





Saludos Cordiales


Murugan

________________________________
From: gnucash-user <gnucash-user-bounces+m.muruganandam=hotmail.com at gnucash.org> on behalf of Stephen <rilesthemtobelieve at gmail.com>
Sent: Sunday, January 15, 2023 4:30 AM
To: gnucash-user at gnucash.org <gnucash-user at gnucash.org>
Cc: gnucash-user at gnucash.org <gnucash-user at gnucash.org>
Subject: [GNC] Certificate of Deposit Early Withdrawal Penalty Account Entry

I had a CD that I closed before it matured. The bank applied a penalty
of 90 days interest at the CD rate. In fact the total penalty was
figured as the sum of principal penalty of $1,366.62 and penalty amount
paid from interest earned for the period of a partial month of $162.89
for a total penalty of $1,529.51. The statement clearly shows a payment
of +$162.89 and a penalty of -$162.89 and a penalty amount from
principal of the $1,366.62.  The interest earned and penalized is a net
$0 so I could just book the $1,366.62 as a charge to the CD account and
as as an charge to an early withdrawal penalty account to obtain the
closing balance on the account. But it seems to me that I should be
booking at least 3 splits to show the interest earned account and
interest earned penalized account and the rest of the penalty as a
charge to the CD account but the numbers produce orphans or imbalances.
I'm treating all entries as income items so interest earned, interest
penalized, and a principal penalty. They are multiple entries and not
multiple splits in the CD income account. Is this the correct way to
book this? Some guidance would be appreciated. Thanks in advance.
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