Doing a Bond Split

Michael B

When I buy a bond and it has prepaid interest what is the best way to set up a split, that one pays for the bond, and the second category is accrued interest NT. I have as you can see a category that says investment:accrued interest, but not NT.  When the split is closed it shows th bond bought, which I want.  Does someone have a better way or any suggestions




Thanks Mike

Concordman

Is this being done manually or do you download from the Fi?

Michael B

Manually

Mike Lane

I have not traded bonds in a while.  Premium and discount amortization was something I tracked outside of QM.  So just addressing the accrued interest, I am not sure I understand the problem exactly. This example assumes you paid 9985 for a 10,000 bond, discounted at 98, part interest at 180, and a transaction fee of 5.   If you use the "Buy Bond" action - you get this screen:



This posts the interest to "accrued interest".  Assuming your NT means non-taxable or something  you want to track separately, then you can edit the individual transaction and create/change the account category.



Here are the transactions after I changed the accrued interest arbitrarily to invest exp:


When you receive the actual interest payment, split the deposit between the accrued interest account and interest income.  That washes out the accrual and posts the remainder to the income account you choose.  Hope this helps.

Michael B

Mike Lane said:

I have not traded bonds in a while.  Premium and discount amortization was something I tracked outside of QM.  So just addressing the accrued interest, I am not sure I understand the problem exactly. This example assumes you paid 9985 for a 10,000 bond, discounted at 98, part interest at 180, and a transaction fee of 5.   If you use the "Buy Bond" action - you get this screen:



This posts the interest to "accrued interest".  Assuming your NT means non-taxable or something  you want to track separately, then you can edit the individual transaction and create/change the account category.



Here are the transactions after I changed the accrued interest arbitrarily to invest exp:


When you receive the actual interest payment, split the deposit between the accrued interest account and interest income.  That washes out the accrual and posts the remainder to the income account you choose.  Hope this helps.

Mike 
thanks for taking the time to answer this question.  All of what you have pointed out is how I do the bond and the accused interest.  My question was more of paying for the bond and the prepaid interest in one entry, not two entrys, and how others may be doing it.

thanks Mike B

Mike Lane

Mike Lane said:

I have not traded bonds in a while.  Premium and discount amortization was something I tracked outside of QM.  So just addressing the accrued interest, I am not sure I understand the problem exactly. This example assumes you paid 9985 for a 10,000 bond, discounted at 98, part interest at 180, and a transaction fee of 5.   If you use the "Buy Bond" action - you get this screen:



This posts the interest to "accrued interest".  Assuming your NT means non-taxable or something  you want to track separately, then you can edit the individual transaction and create/change the account category.



Here are the transactions after I changed the accrued interest arbitrarily to invest exp:


When you receive the actual interest payment, split the deposit between the accrued interest account and interest income.  That washes out the accrual and posts the remainder to the income account you choose.  Hope this helps.

Mike B. check out first screen.  It is paying for the bond, accrued interest and commission/fees in one entry.  You only have to edit the accrued interest entry if for some reason you want to assign a different account. 

I am guessing you are entering a split because you are not using an investment type account.  When you open a transaction in an investment account your get the "buy bond" option as one of the possible actions.  If you try to enter this from a checking or asset account you won't have that "buy bond" and must use a split.  If you are not going through broker account then set up a dummy investment account to give you these options.  You would have to post a transfer from your checking or other source to the investment account.  I can step through this more if this is the problem.

-Mike

Michael B

Mike Lane said:

I have not traded bonds in a while.  Premium and discount amortization was something I tracked outside of QM.  So just addressing the accrued interest, I am not sure I understand the problem exactly. This example assumes you paid 9985 for a 10,000 bond, discounted at 98, part interest at 180, and a transaction fee of 5.   If you use the "Buy Bond" action - you get this screen:



This posts the interest to "accrued interest".  Assuming your NT means non-taxable or something  you want to track separately, then you can edit the individual transaction and create/change the account category.



Here are the transactions after I changed the accrued interest arbitrarily to invest exp:


When you receive the actual interest payment, split the deposit between the accrued interest account and interest income.  That washes out the accrual and posts the remainder to the income account you choose.  Hope this helps.

Mike

thanks for the help, I do use the investment account, and buy bond, there is no problem, I was just wondering if others used a split on the payment side

thanks

Mike Lane

Mike Lane said:

I have not traded bonds in a while.  Premium and discount amortization was something I tracked outside of QM.  So just addressing the accrued interest, I am not sure I understand the problem exactly. This example assumes you paid 9985 for a 10,000 bond, discounted at 98, part interest at 180, and a transaction fee of 5.   If you use the "Buy Bond" action - you get this screen:



This posts the interest to "accrued interest".  Assuming your NT means non-taxable or something  you want to track separately, then you can edit the individual transaction and create/change the account category.



Here are the transactions after I changed the accrued interest arbitrarily to invest exp:


When you receive the actual interest payment, split the deposit between the accrued interest account and interest income.  That washes out the accrual and posts the remainder to the income account you choose.  Hope this helps.

MIke B.
I took it as your "payment" for the bond instead of your receipt of the interest payment. 

Here is how I treated it.  I bought bond and allowed the entry to post the accrued interest. When I received the first interest, it was posted 100% to interest income. Year end, I used category report to reconcile to taxable interest on tax return. I did not recategorize the accrued interest because QM treats accrued interest as a "spending" account.

I didn't recategorize the accrued interest or split the receipt of the first interest payment. 

Mike