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Level 1

Brokerage statement journal entry

I'm tracking a brokerage account for my non-profit business in QB.  I could use help figuring out the journal entry.  The account contains both cash/stocks - but I'm hoping to track them as a single asset account just for simplicity.


In October, the beginning balance was $521,832 and the ending balance was $525,360.  Advisory fees were $494 and the change in value was $4,022.  Interest income was $877 and was added back to the cash part of the account.


I've made the following entries:


Investment account - Debit for interest income (balance sheet)

Interest income - Credit for interest income (P&L)

Investment account - Credit for advisory fees (balance sheet)

Advisory fee expense - Debit for advisory fees (P&L)

Investment account - Debit for change in market value (balance sheet)

Unrealized Gains / Other Income - Credit for change in market value (P&L)


However, my investment account balance also needs to be credited for the amount of the interest income since it was reinvested.  Do I need to make the following journal entry?

Investment account - Credit for interest income reinvested (balance sheet)

Unrealized Gains / Other income - Debit for interest income reinvested (P&L)


Basically, since the interest income is added back to cash for the total balance of the account, it seems like it should be an offset in unrealized gains?  I'm not sure where the offset should be.



1 Comment
Level 15

Brokerage statement journal entry

You can make an entry for a change in market value, but it is a balance sheet change
for an increase in market value, debit unrealized gain asset account, credit unrealized gain equity account

Using an income account for unrealized gain misstates the P&L, especially since once you print the report the amount has changed to do market fluctuations.

dividend and interest income should post to income accounts named for that, yes it would other income unless investing is the type of business.

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