Adjusting Cash

[ThomasK]

Thanks Mark for your replies in the other posts...to better understand the various ways that I need to adjust cash balances I’ll try to summarize in this new topic post and see if I understand.

A.
If I wish to WITHDRAW (no performance impact) a few thousand dollars in cash from my brokerage account, this would be an “external cash flow” and I would record this as:
Data Register, “New>>” Sell ?

Please note that I have been using “Transfer Out”…is this wrong…ie. Should I switch those entries to “Sell”?


B.
If I wanted to ADJUST (with performance impact) the cash balance by a few dollars to make FM = Brokerage Statement (for example, FM has me buying 1000 shares of ABC at $10 but the actual purchase was done at market resulting in an average cost of $10.025/share, but this is on a few trades and results in say $500/mth cumulative):
Data Register, “New>>” Distribution, Type = Other …Memo=“Commissions”
>> use negative value/shares and price =1 to reduce
>> use positive value/shares and price =1 to increase


C.
If I set the system to “No Fees” so I don’t record the commissions paid on the entries into FM, but I want to ACCOUNT for my commissions paid (with performance impact) at the end of the month (using the totals from my brokerage statement) then I would record that as:
Data Register, “New>>” Distribution, Type = Account Fees


With the above cash flows, ideally I wish to see in a monthly report:
A. money out of the account
B. the variance from what my buystop was coded for and what I actually got filled at by running a report extracting "Other distributions"
C. the commissions I paid by extracting "Account Fee distributions"

Thanks,
ThomasK

[Mark]

Hi ThomasK,

A) Correct. A Transfer Out is fine too, they are equivalent here. A sell is simpler, so I usually recommend those, but they will give the same result in this case.

B) Correct.

C) Correct, using shares/value as a negative and a price of 1.

For those reports, use a "Portfolio Performance" report to see the total Withdrawals/Contributions that shows your external flow in/out of the portfolio. Use a "Distribution Summary" report to see the Other/Account Fee totals.

[ThomasK]

Thanks Mark, but to ask against Question "A":

A2.
I see on the Transfer box that there is an OOP and Tax windows…NOW I get what “simpler” means…by recording Cash In/Out without a performance hit then I use BUY/SELL instead.

I still want to use Transfer In/Out as it shows up as such in the Data Register, rather than a Redemption as it shows for an ‘ordinary’ sell.

Question on Transfer IN
If I want to record a deposit into the account, and of course Price =1/share, do I:
a. Make the value in Shares = Market Value = OOP Cost Value?
b. Do I put in a Tax Cost Basis Value = to the above value?

Thanks

[ThomasK]

Thanks Mark, but to ask against Question "C"

C2.
Question on how to record the entire month’s commissions from brokerage statement at EOM. I’m doing this via Data Register as New>Distribution. When I do as in (a) below the GAIN for the account shows up as a negative value…perfect! Now I can see my monthly commissions as one line, like on my brokerage statement, and not having to enter it on every transaction and keeping all transactions clean!

a. If I use Type=Account Fee it says “Value: (neg)” but I’m still having to enter the value as a negative number myself. Is this the way to do it, that the “(neg)” is just a reminder, yes?

b. Is it OKAY to use Type=Other instead??? If I use “Other” I can see the values (along with Transfers Out) under a column heading in a custom report I created, which is what I want, to see commissions separate and sortable. I'm guessing either method is equivalent in the end, just displaying under different headers, yes?


Thanks

[Mark]

Hi ThomasK,

A2) Yes, put all the values equal to the number of shares in the case of cash. A big difference in transfer versus buy/sell is the treatment of capital gains. With transfers you can have a separate date/value for when the shares came in versus their tax basis date/value. This isn't an issue for cash, so just keep the values all equal to the shares, and the cost basis date also equal to the transfer date.

C2) That is all correct. The text "(neg)" is just a reminder that typically those values are negative. You can use any type of distribution you want, they are mostly for tracking purposes. They all affect performance equally. There are some differences when it comes to capital gains (Account Fees can optionally affect gains, and Return of Capital lowers your tax basis), but for cash you don't care about the capital gains, so they are all equivalent in this case. BTW, you can also rename the distributions if you want, so you could change "User-defined 1" for example to "My Commissions" or something like that. See "Options / Distribution Labels...".

[ThomasK]

This program just keeps getting better and better!

[ThomasK]

Okay, last question on this idea of distributions, pos/neg

Distributed Dividends
a. Why are some of these Type of transactions reading as "Purchase"? I get that the cash in the bank goes up with a Purchase, but why are these not recorded as "distributions"??
b. Why are some of these Type of transactions reading "Dividend"?? These ones come up with the box to allow amounts to be "Reinvested". Are these supposed to show reinvested or not??

What should I be doing?


Interest Income
From the brokerage statement, there is occasional interest income. I'm recording it as Type = Interest Income Reinvestment. Yes, no, better way??

Thanks,
THomasK

[Mark]

Hi ThomasK,

Distributed Dividends: Are you asking about in the cash account? If a stock pays a dividend, this is recorded as a distributed (not reinvested) dividend in the stock investment, and a purchase into the cash investment. This is not a distribution of cash, it is a purchase of cash, from the proceeds of the stock's dividend. The money the stock paid was deposited into cash.

Interest Income: Interest income of cash should be recorded as you've described, a reinvested distribution of type "Interest". That is what happened, the cash earned interest, and was deposited back into the cash investment.

[ThomasK]

Groovy.

I see now I was looking at BOTH the Cash Account and the Data Register...thus seeing the different Type for the transactions for both sides of the ledger so to speak.

Thanks

[elliots]

Mark,

Minor question. My issue is similar to case B in the original post, but I'm trying to adjust shares. I've got long histories of fund transactions downloaded with too much decimal point "depth." As a result I've got many balances with small (and some with a share or two) discrepancies with printed statements. I don't want/need to audit hundreds of transactions so I'm trying to put adjusting transaction to match the exact balance shown on the statement. I've put in buy/sell transactions on 12/31 and can adjust the balances as I want. I discovered, however, that when I put in the transactions for the right shares and forced calculation of the required price, the price goes into the price file as a 12/31 price and now the $values don't reconcile. It appears that I can then go back in and overwrite the phoney price, but is there a way to put a share adjustment in without having a price go to the price file?

[Mark]

Hi elliots,

When you record a transaction, if there is not a closing price already recorded for that date, FM also records a closing price, using your transaction price. Since 12/31/17 is a weekend, you would not normally already have a retrieved price for that date, so FM will update a closing price based off your transaction price. You could either record your adjustment for a different date, where you already have a closing price (maybe Friday, 12/29/17), or you could record it on 12/31/17, but then you would have to go also edit that closing price if you want it to be different than your transaction price. You can edit closing prices in the Data Register under the "Data Type" of "Prices".