Skip to main content
M
melfa
December 17, 2022
Question

Accounting for business owned securities

  • December 17, 2022
  • 1 reply
  • 0 views

In my business, I have a business checking account and a brokerage account which I use for savings and investments. I am not sure how to account for the business investments.

 

 Example 1: I move excess cash from the checking account to the brokerage account so I can invest the funds in a money market mutual fund. I have been accounting for these things as transfers. Transfer from checking to brokerage, transfer from brokerage to money market fund. When the money market fund pays dividends, I've been recording that as interest earned and when it is reinvested I transfer back to the money market fund. This all strikes me as reasonable, if not the exact right way to do this. Please let me know if there is a more accurate way to do this.

 

 Example 2: I got the bright idea to capture some yield by buying a T-Bill in the business brokerage account. The T-Bill matures in time to fund taxes and bonuses, and I end up with > 4% yield. Problem is I don't know how to account for this transaction.

1 reply

Rainflurry
Rainflurry
December 18, 2022

@melfa 

 

Example 1: That all sounds appropriate.

Example 2: Record the T-Bill as an Other Current Asset at the purchase price.  I would suggest letting your CPA handle the entries for the interest income due to the complexity of recording income received/accrued if the T-Bills were purchased at a discount.

M
melfaAuthor
December 20, 2022

Thanks for the response, Rainflurry.

If I look at my chart of accounts, it is showing discrepancies between the QB balance and the bank balance. This is because the money market fund and the T Bill are not seen as being within the company brokerage account, but as separate accounts instead. Is there a way to fix this?

 

 

Terms & ConditionsAccessibility statement