[GNC] properly record short-selling

[Murugan Mariappan]

you would have the following journal entries:

a. Short Sale Transaction:

  *   Debit: Cash (Asset) $2,613.68
  *   Credit: Short Sale Liability (Liability) $2,613.68

b. Borrowed Margin Loan:

  *   Debit: Margin Deposit (Asset) $1,175.16
  *   Credit: Loan Payable (Liability) $1,175.16

$3,789.83 is the total liability for you including borrowed stock and margin loan. (Total borrowing cost will be $ 473.72 per stock)




Saludos Cordiales


Murugan

________________________________
From: gnucash-user <gnucash-user-bounces+m.muruganandam=hotmail.com at gnucash.org> on behalf of Mattia Rizzolo <mattia at mapreri.org>
Sent: 15 November 2024 18:27
To: gnucash-user at gnucash.org <gnucash-user at gnucash.org>
Subject: [GNC] properly record short-selling

Hello people,

For the first time since I started using gnucash 3+ years ago, I'm now
shorting on a stock.  Nice how I refrained from excessive speculation
for 3+ years hah!


So, I started with
Assets:Banks:USD +$1,274.26
Assets:Investments:Stocks USD:TSLA 0


And what is clear from my bank statements is:
 * I sold 8 TSLA stocks for $326.71 each, tot 2,613.68, minus $3.94 fee,
   so I have a +$2,609.74 in A:Banks:USD
 * this is operating on a 45% margin, and shows a "margin amount" of
   $1,176.16
 * to cover the rest, apparently I borrowed 2,459.01 EUR according to
   the statement, go figure what's that in USD
 * this being a bank, they are not just happily loaning me shares
   without any insurance, so I have a -$3,789.83 on my statement.  But
   where is that number coming from? It looks suspiciously close to what
   2,459.01 EUR + 1,176.16 USD would look like.
 * it *seems* those 8 shares I borrowed for the operation are valued
   $473.7295 each, total $3,565.57  — I'm seriously confused about where
   that figure is coming from, but it's listed in the stock transactions
   list with the note "lending".  (note: I get what short selling is all
   about, I'm only confused about where that $473 figure comes from).


At the end of it all, the bank gives me a balance of +$94.17 and -8
shares.


How do you recommend I record all of the above in gnucash?

For long positions it's a fairly straightforward
    Assets:Banks:USD  +$1234
    Liabilities:Loans:Margin Trading:USD -$1234

    Assets:Banks:USD  -$3456
    Assets:Investments:Stocks USD:whatever +$3456
But clearly it's not _that_ straightforward for shorts.


Would people normally create a Liabilities accounts for the asset loan
(with the counter-account being the regular stock account under Assets)?
Or would you just let the A:I:Stocks account go negative while the
position is open?

And how do you even start recording the cash that has been loaned just
to cover the position?


If anybody is able to make heads and tails of this situation, I would
really appreciate it!

--
regards,
                        Mattia Rizzolo

GPG Key: 66AE 2B4A FCCF 3F52 DA18  4D18 4B04 3FCD B944 4540      .''`.
More about me:  https://na01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fmapreri.org%2F&data=05%7C02%7C%7C368c7076bb1642ff83b208dd05bc8475%7C84df9e7fe9f640afb435aaaaaaaaaaaa%7C1%7C0%7C638673029427351968%7CUnknown%7CTWFpbGZsb3d8eyJFbXB0eU1hcGkiOnRydWUsIlYiOiIwLjAuMDAwMCIsIlAiOiJXaW4zMiIsIkFOIjoiTWFpbCIsIldUIjoyfQ%3D%3D%7C0%7C%7C%7C&sdata=zyAAfAHAw1hjwE08QVSCQJjIkUaVniYXR%2B2ynB5vULM%3D&reserved=0<https://mapreri.org/>                             : :'  :
Launchpad user: https://na01.safelinks.protection.outlook.com/?url=https%3A%2F%2Flaunchpad.net%2F~mapreri&data=05%7C02%7C%7C368c7076bb1642ff83b208dd05bc8475%7C84df9e7fe9f640afb435aaaaaaaaaaaa%7C1%7C0%7C638673029427371278%7CUnknown%7CTWFpbGZsb3d8eyJFbXB0eU1hcGkiOnRydWUsIlYiOiIwLjAuMDAwMCIsIlAiOiJXaW4zMiIsIkFOIjoiTWFpbCIsIldUIjoyfQ%3D%3D%7C0%7C%7C%7C&sdata=fmIEi2CXd6Rc5CxLE2geRH39et582E4ay53Rv1EnnHE%3D&reserved=0<https://launchpad.net/~mapreri>                  `. `'`
Debian QA page: https://na01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fqa.debian.org%2Fdeveloper.php%3Flogin%3Dmattia&data=05%7C02%7C%7C368c7076bb1642ff83b208dd05bc8475%7C84df9e7fe9f640afb435aaaaaaaaaaaa%7C1%7C0%7C638673029427383134%7CUnknown%7CTWFpbGZsb3d8eyJFbXB0eU1hcGkiOnRydWUsIlYiOiIwLjAuMDAwMCIsIlAiOiJXaW4zMiIsIkFOIjoiTWFpbCIsIldUIjoyfQ%3D%3D%7C0%7C%7C%7C&sdata=0wdMicSg%2FiUjDpBv1tNM18zvDS4hNCyzmsDDAw%2BnZC8%3D&reserved=0<https://qa.debian.org/developer.php?login=mattia>  `-