Q:

Subject: Stocks

 

Kerry,

 

I have made the dividend entries as I understand your instructions.  Of course the balance in QuickBooks does not agree with the balance on the statement for this account.  Since I only pay tax on the dividend income, I assume this in not a problem.

  

P.S.  I see my question made your newsletter so I don't feel too dumb!

A:

Most non-accountants are confused as to the proper way of handling reinvested dividends; so I thought your question was perfect for educating others.

If you are referring to the market value of the shares, you are correct that the stockbroker's statement will not match the figures in your QB because QB is strictly a record of your cost basis, or what you have invested into the shares.

However, the dividend income reported by the stockbroker for the previous year should match what you have in your QB and is the most important way we have of double-checking the accuracy of the QB data.

Kerry

Follow-Up:

Kerry,

 

My dad just had his 88th birthday.  He is a retired accountant so I thought you might enjoy seeing his reply.

He is much better on the computer than I am.  He teaches classes at the senior center!

Thanks for sending Kerry's reply.  I am impressed with him and his explanation.

Your QB is more detailed and accurate, as he said.

Over the years I have become accustomed to the automatic steps taken by

Quicken and MS Money and forgot I ever used a General and other Journals.

In MS Money,  my portfolio page shows in each investment the number of

shares owned,  The total value as of the last entry date and the amount

of gain.  This is a backward way to arrive at the investment cost, but

arrives at the same answer.

 

 

Labels: QB

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 1/28/2007 07:05:00 PM Send this post: