AccuraBooks Tracking Investments Bookkeeping- Part 4
Part 4 in this series of tracking investments bookkeeping will cover reinvested dividends and market value adjustments.
In general, Reinvested Dividends do not get paid out in cash, but rather the income is simply reinvested in the underlying equity; in other words, more shares of stock are purchased with the earned dividends.
In general, Market Value is simple the price (or value) that the investment community would give for a particular asset. If you think an apple is worth $10, then you will pay $10, but another person may think the apple is worth only $1 and may be able to find an apple for sale for $1.
Reinvested Dividends typically occur on a monthly or quarterly basis; Market Value changes can change every day, but really a monthly or quarterly MV adjustment in your bookkeeping is typically suitable for most people.
To record Reinvested Dividends and Market Value changes in your books, the journal entries can be like the following:
For the Reinvested Dividends:
| Debit | Credit | ||
| Reinvested Dividends Income | $115.50 | To recognize this income in your books | |
| XYZ Market Fund Asset | $115.50 | To increase the corresponding asset’s value. |
For the Market Value Changes:
| Debit | Credit | ||
| XYZ Unrealized Gains Equity | $3518.45 | To post equity gains (but noting not realized) | |
| XYZ Market Fund Asset | $3518.45 | To increase the corresponding asset’s value. |
Stay tuned for part 5 of this investments bookkeeping series.
Note: AccuraBooks is a bookkeeping firm only, so please consult with your C.P.A. for verification and clarification about the contents of this article.