Reserves Investing

Started by HoaB • 3 replies • 163 views

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HoaB (California)
Posts: 1

Posted:

I am trying to figure out how to book a Treasury Note investment purchased at a discount. Can anyone outline the journal entry? i.e. which amount is booked to the bank account - face value or original purchase price? We book the face value in the reserves asset account. Which account should hold the unrealized gain and when should it be realized? Please help.

SheliaH (Indiana)
Posts: 6,964

Posted:

This question is best answered by your association accountant.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

DeanJ
Posts: 1,786

Posted:

Quote:

Posted By HoaB on 11/11/2024 12:28 PM
I am trying to figure out how to book a Treasury Note investment purchased at a discount. Can anyone outline the journal entry? i.e. which amount is booked to the bank account - face value or original purchase price? We book the face value in the reserves asset account. Which account should hold the unrealized gain and when should it be realized? Please help.

I am not an accountant, but why would you record a gain on any account until it accrued or not record a gain while it was accruing?

The note like a CD has a value at any given month. It seems to me you would indicate the current value in the reserve account.

BryonW (Massachusetts)
Posts: 55

Posted:

I agree with Dean, carry the treasury note at the value you paid. That is the current market value. This is called "mark to market".

Assuming you bought for $900 and face value is $1,000 then accounting entry for the purchase would just be:

Debit - Treasury Note (asset account) - $900
Credit - cash - $900

Then upon maturity:

Debit - cash $1,000
Credit - Treasury Note - $900 (this entry zeros out the asset account for the note)
Credit - investment income $100

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