[GNC] Certificate of Deposit Early Withdrawal Penalty Account Entry

[Stephen]

Interest is accounted for as income per CD account. The way I ended up 
doing it allows me to see how much interest I have earned by each and 
all accounts and the interest penalty and principal penalties are noted 
as to which account they were applicable but I do not track the 
penalties account by account (because the penalty is for closing the 
account -- a one time event).

On 1/15/2023 2:59 PM, Murugan Muruganandam wrote:
> stephen
>
> one inquisitive question. did you receive any interest on the CD at 
> all earlier and if so how did you account it
>
>
>
> 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 5:38 PM
> *To:* Gyle McCollam <gmccollam at live.com>; gnucash-user at gnucash.org 
> <gnucash-user at gnucash.org>
> *Subject:* Re: [GNC] Certificate of Deposit Early Withdrawal Penalty 
> Account Entry
> Thanks to you and Murugan I got this sorted. As usual, over-thought and
> over-wrought. Although I'm sure I could show all the changes in one
> split entry it was easiest for me to credit the interest 162.89 as one
> standalone entry first. Then I could see my way clearly to showing the
> two penalty sub-amounts totaling 1529.51. Intuitively I fairly certain I
> could have shown the interest earned among the splits all as one entry
> but I'm going to quit while I'm ahead. I just didn't want to lose the
> detail of the separate penalty amounts nor their total. Again, many 
> thanks.
>
> On 1/15/2023 11:23 AM, Gyle McCollam wrote:
> > 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 
> <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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