How Do I Record Interest, Dividend, or Capital Gain Amounts Reinvested?

| Posted: 25-04-2008 | Comments: 0 | Views: 31 | Rating: (170)

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You need to record any reinvestments of interest income, dividend income, or capital
gain distributions. Fortunately, as long as you have the reinvestment transaction in-
formation from the mutual fund company—this probably comes on the monthly state-
ment—these transactions are not difficult to record. Specifically, take the following
steps:

1. Display the investment account register.
Click the Accounts & Bills link, and then select Account List so that Money dis-
plays the Pick An Account To Use window. Then click the investment account.
Money displays the account register for the mutual fund.

2. Tell Money you want to record a purchase.
To indicate that you want to record the purchase of additional mutual fund shares,
click the Investment Transactions link. Money then adds the transaction entry area
to the bottom of the account register. To record a new transaction, click the New
button.

3. Describe the date the income or gain is received.
Enter the date on which the income is received or the capital gain distribution is
made in the Date box. Enter the date directly into the Date box, or click the Date
box’s button to display the pop-up calendar.

4. Name the mutual fund.
Click the Investment box’s button, and select the mutual fund name from the list
of mutual fund investments.

5. Identify the transaction as a reinvestment.
Click the Activity box’s button, and then select the appropriate reinvestment
description from the list of investment transactions. For example, if you are recording
the reinvestment of a dividend, select Reinvest Dividend. If you are record-
ing the reinvestment of interest income, select Reinvest Interest. If you are recording
the reinvestment of short-term capital gains, mid-term capital gains, or long-term
capital gains, select the appropriate capital gain reinvestment activity.

6. (Optional) Provide a memo description.
Describe additional information related to the reinvestment in the Memo box. Often
this won’t be necessary.

7. Describe the number of shares purchased by reinvesting.
Click the Quantity box’s button, and then enter the number of shares shown on the
monthly statement that records the reinvestment transaction.

8. Identify the price paid.
Enter the mutual fund share price in the Price box. You can enter mutual fund share
prices using either decimal or fractional share prices. For example, you could enter
the share price as 10.125 or 10 1/8.

9. Describe any commission paid.
Enter the commission or fee you paid in the Commission box. Click the Commis-
sion box’s button to display a pop-up calculator you can use to calculate the
commission.

NOTE Most mutual funds don’t require you to pay a commission simply for reinvest-
ing interest, dividend, or capital gain amounts. If your mutual fund charges you
such a commission, you may want to look at moving your money to another
mutual fund management company where you don’t pay for this transaction.

10. Confirm the total transaction amount.
After you enter the quantity, price, and commission information, Money calculates
the total reinvestment amount and displays this value in the Total box. Confirm that
the total reinvestment transaction amount is correct.

NOTE As mentioned earlier, Money will calculate any one of the following four vari-
ables given the other three: quantity, price, commission, and total. You want
the quantity and total amounts to be precise. Ideally, you also want the price
amount to be correct, although this is less important. What you may want to
do, if you have rounding troubles—this occurs when the mutual fund company
keeps more precise records of data such as fractional shares than does Money—
is have Money calculate the least important yield or value. You might, for ex-
ample, choose to have Money calculate a commission—but the commission
would really equal the rounding amount.

11. Record the reinvestment transaction.
After you have correctly described reinvestment of interest, dividend, or capital gains,
click the Enter button. Money records the reinvestment transactions in the
investment account register.

NOTE Typically, you will record several reinvestment transactions at one time. For
example, at the end of the year, your mutual fund company may report and
distribute interest, dividend, short-term capital gain, and long-term capital gain
amounts and reinvestments. In this case, you would need to record four
separate reinvestment transactions, assuming you reinvested interest, dividend,
short-term capital gain, and long-term capital gain amounts

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How Do I Record Interest, Dividend, or Capital Gain Amounts Reinvested?

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