Thursday, November 8, 2007

Posting Stock Sales In QB


Subject: stock sales on quickbooks


I read what you wrote regarding tracking stock investments in Quickbooks.  You make it sound very easy to record a stock sale and purchase for that matter.  And I am sure it is.  However, for the weak at heart or maybe the mind, I don’t get it.


For example,  say I buy 100 shares of IBM for $50 in June 2000.  I should have recorded that under Stock Account:  IBM  Other Asset          Correct?


Then I sell it in June 2007 for $100.  I should record it under Stock Account:  IBM  Income account  ?  and then I don’t understand how I transfer the cost of the stock, the $5000 to a Cost of assets Sold contra-income account.  Is that a journal entry?  Don’t get any of that.


If you could make it even easier for someone like me, I would be very appreciative.

Thank you,


You are on the right track; and I'd be glad to elaborate in more detail.

First, you need to understand that there is no one perfect way to do this and any game-plan you use should be reviewed with your personal professional tax advisor to ensure that you are in synch with what works best for his/her needs in regard to tax planning and tax return preparation work.  My comments represent how I prefer to see these transactions entered to make it easier for me to have the critical data I need to prepare my clients' tax returns as efficiently as possible.

You should have an Other Asset account called something like "Stocks."  While some people do set up a sub-account for each stock they buy, I find that to be overkill that ends up making the chart of accounts and balance sheet too large and unwieldy.  One main account will work fine as long as you are thorough in the info you enter for each transaction.  For purchases, be sure the proper date is used for the QB entry and the Memo section is filled in with the name of the stock and the number of shares.

What many people overlook is reinvested dividends when keeping track of their stock investments.  To properly do this, you need to use the General Journal to enter the dividends as a credit to Dividend Income and a debit to the Stocks asset account.  Be sure to fill in the memo sections of both sides of the entry to record the relevant details, including name of the stock and number of shares purchased.  With most DRiPs (dividend reinvestment plans), the new purchases are fractional shares; so you need to be careful when entering this.

For the sale of stocks, you do use the General Journal to transfer the cost of the shares sold from the Stocks asset account to the  AssetCost contra-income account.  Again, be sure the date of the entry matches the sale date and that you fill in the memo section with all of the relevant data, including name of stock and number of shares.  If the number of shares sold is different than any single purchase, you will need to make an entry for each lot sold so you can keep track of which sales are long term (over 12 months holding) and short term (under 12 months).

I hope this helps you better understand how to record stocks in QuickBooks.  These comments are by necessity general in nature.  Your personal professional tax advisor should be able to give you more specific tips for your unique circumstances.

Good luck.

Kerry Kerstetter