[GNC] Certificate of Deposit Early Withdrawal Penalty Account Entry
Murugan Muruganandam
m.muruganandam at hotmail.com
Mon Jan 16 12:43:30 EST 2023
thanks Stephen
so it can be 2 cases
1. Interest re invested:
* Cr: Income: Interest Earned and Dr: CD Account
2. interest non re invested
* Cr: Income: Interest Earned and Dr: Bank: Bank Account
in case of penalties , you should point the penalties to the same Income: Interest Earned account to show the net earnings.
Saludos Cordiales
Murugan
________________________________
From: Stephen <rilesthemtobelieve at gmail.com>
Sent: Monday, January 16, 2023 2:32 PM
To: Murugan Muruganandam <m.muruganandam at hotmail.com>; 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
Some clarification: Murugan, I did earn interest on the CD throughout most of 2022 and showed it as earned interest in the CD account transactions and also in an earned interest transactions account.
On 1/15/2023 4:54 PM, Stephen wrote:
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><mailto:gnucash-user-bounces+m.muruganandam=hotmail.com at gnucash.org> on behalf of Stephen <rilesthemtobelieve at gmail.com><mailto:rilesthemtobelieve at gmail.com>
Sent: Sunday, January 15, 2023 5:38 PM
To: Gyle McCollam <gmccollam at live.com><mailto:gmccollam at live.com>; gnucash-user at gnucash.org<mailto:gnucash-user at gnucash.org> <gnucash-user at gnucash.org><mailto: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 live.com> <mailto:gmccollam at gyleshomes.com>email
>
> ------------------------------------------------------------------------
> *From:* gnucash-user
> <gnucash-user-bounces+gylemc=gmail.com at gnucash.org><mailto:gnucash-user-bounces+gylemc=gmail.com at gnucash.org> on behalf of
> Murugan Muruganandam <m.muruganandam at hotmail.com><mailto:m.muruganandam at hotmail.com>
> *Sent:* Sunday, January 15, 2023 11:17 AM
> *To:* Stephen <rilesthemtobelieve at gmail.com><mailto:rilesthemtobelieve at gmail.com>; gnucash-user at gnucash.org<mailto:gnucash-user at gnucash.org>
> <gnucash-user at gnucash.org><mailto: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><mailto:gnucash-user-bounces+m.muruganandam=hotmail.com at gnucash.org> on
> behalf of Stephen <rilesthemtobelieve at gmail.com><mailto:rilesthemtobelieve at gmail.com>
> Sent: Sunday, January 15, 2023 4:30 AM
> To: gnucash-user at gnucash.org<mailto:gnucash-user at gnucash.org> <gnucash-user at gnucash.org><mailto:gnucash-user at gnucash.org>
> Cc: gnucash-user at gnucash.org<mailto:gnucash-user at gnucash.org> <gnucash-user at gnucash.org><mailto: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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