Comments for Accounting for Rights Offering

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Jan 06, 2016
Confusing part
by: Dave

You have captured exactly the transactions for purchases, sales, dividends and reinvested dividends. I'm glad the method I use is "Lake approved" :-).

The AFS account matches exactly the book value on the brokerage statement, well except for this rights offering.

It would have been fairly straightforward and probably not worthy of a post on this board if the dividend statement from the brokerage did not show the minus $16.10.

Crediting the cash account for the stock offering throws off the cash balance of my account!! The cash goes up and then down by the $16.10 in agreement with the dividend statement.

Jan 06, 2016
I'm confused too
by: Lake

Dave, the picture of your statement shows your cash (ignore Activity column for the moment) was credited by $16.10 and then your cash was charged by $16.10.

The dividend and stock dividend activity shown on your statement shows your cash account was affected by both transactions so I fail to see how your cash is now out.

If your cash is account is out by $16.10 after this entry ...

Entry in QuickBooks for Rights Offering Received (Stock Dividend):

DEBIT Available For Sale at cost - Other Asset Type Account
CREDIT Investment Cash - Current Asset Type Account

... you've made some other entry on the "charge" side in addition to the one I suggested.

All I did was handle each line on your cash statement separately.

This books the cash received for the dividend:

DEBIT Investment Cash - Current Asset Type Account
CREDIT Canadian Dividends - - Income Type Account

This books the "purchase" of the stock dividend:

DEBIT Available For Sale at cost - Other Asset Type Account
CREDIT Investment Cash - Current Asset Type Account

I fail to see how debiting cash $16.10 then crediting cash $16.10 puts your cash out.

Maybe I'm not understanding what you are saying. I don't see a dividend statement ... just a cash balance statement. There should be no in and out in your dividend income account. You received one dividend for $16.00. Whether it was paid in cash or in kind is not relevant to the dividend income account balance.

What am I not understanding??? You are saying your AFS is out by $16.10 and your cash is out by $16.10. Wouldn't booking the stock dividend entry put everything in balance?

Jan 06, 2016
Less confusing
by: Dave

I did not include a picture of my dividend statement from TD in the previous posts, but the dividend statement also shows the plus and minus dividend!

I went to and read the prospectus this morning. It prompted me to fire off a letter to TD this morning. I believe they messed up the transaction and that there is $16.10 extra in my account. The transaction should have simply been a taxable dividend declared (and a forced buy of the rights) and a capital loss on the sale/expiration of the rights.

I'm sure there will be other confused TD customers! There may also be a bump in TD profits this quarter as they claw back the cash from all the holders of this stock. Good thing I own TD shares.

May 22, 2016
How to record losses in Forex trading
by: Emma

My boss has started trading on Forex. Sometimes he earns money, sometimes he loses. I'm pretty sure that the earnings are recorded as a CR in the income ledger account, but how do I record the losses? Are they just a DR in the same income ledger account?

Many thanks!

May 22, 2016
by: Lake

Emma if you don't know how to record investment transactions, ask your boss if you can speak to his accountant on s/he would like it recorded.

If that isn't possible, in the QuickBooks desktop and online versions, there is usually an account called "Ask the Accountant". Post your entry there so it can be dealt with properly at year-end by the accountant and/or tax preparer.

As you can see by the entries shown in the above post, QuickBooks does not track all the information required to track the investments for tax purposes.

This post also deals with how to book investment income and loss ....

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