Problem with maturing corporate bonds--download from Fidelity

drhelen

When a corporate bond matures in my Fidelity account the transaction shows as a million dollar loss rather than a $10,000 credit. I have a workaround involving deleting the transaction, deleting the original bond and adjusting the cash but there have been several of these in the past year and now this investment account is a mess. Correct value but it shows a massive negative cash amount. Any way to fix this other than buying a cheap Windows computer and using it for Quicken?

Tom Young

“When a corporate bond matures in my Fidelity account the transaction
shows as a million dollar loss rather than a $10,000 credit.”

That sounds to me like a problem with pricing of the maturity. How, exactly, is the maturity entered into Quicken? Typically you'd use a “BondsSold” action, with the appropriate price. Certainly deleating the original bond and then simply entering cash isn't the correct accounting for the maturity. How, exactly, are you increasing (presumably) the cash? What does that entry look like?

That said, I can't concieve of how you could be negative cash if your procedure is adding cash to the Account. And, if the Account balance overall is correct despite the negative cash value, what's offsetting that negative cash?

I think we need lots more details and some screen shots to try and figure out the problem here.

I'll add this additional thought. Bond maturities can be somewhat tricky, depending on circumstantces, and you really need to understand how to make a valid entry on your own if you really want to get the accounting right. In my very limited experience buying bonds and having them mature I've seen that financial instutions generally don't get the account correct. Generally financial institutions try to get your holdings correct, even if they do violence to the underlying correct accounting, so deleting the entry sent down by the financial institution is probably the right way to start, but clearly something's going wrong with your subsequent entries.

drhelen

Thanks but I don't think a pricing problem can lead to a million dollar (actually a million plus 10K) error. Both the original purchase and the maturity were downloaded, not entered by hand. This problem does not occur in Quicken for Windows which is why I may need to get a Quicken-only Windows machine. I agree bond accounting is different from stock accounting--price is a little less precise and the "real" price needs to include accrued interest. But that is pennies on the dollar and only important if you are a bond trader which I am not.
My problem at this point is that the account shows negative cash of roughly 130,000 but the value of the account is accurate so if I fix the cash the value will be wrong. Maybe delete the account and start from scratch?

Tom Young

I overlooked the “Mac” aspect of this question, but I simply don't understand why you're facing the problem you're describing.

I assume Quicken for Mac has the ability to show you the holdings in an Account as of a given date, similar to what Quicken for Windows does. If the total Account value is correct but cash is negative, (and I don't understand how that can be based on your description of your work around of deleting the matured bond and then adding the cash associated with the maturity to the Account), then there HAS TO BE some offsetting error someplace else in the Account. So looking at the holdings in the Account - which is nothing more that a list of securities (and cash) and their value - and comparing that to what Fidelity reports as the holdings should immediately reveal the offset. Maybe, just maybe, identifying the offsetting error would give you some clue as to what's going on here.

Accounting isn't magic, it's simply math. So the calculation of gain or loss on a maturity is simply (#of units sold x selling price - #of units bought x buying price). You say the right hand factor (cost) is correctly stated, so the error must be on the left hand factor (proceeds). So, what's wrong with the proceeds? Number of units? Per unit selling price? Some combination of the two?