Recording DRIP transactions in bivio
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Recording DRIP transactions in bivio A fellow bivio user recently asked...
Our club has two accounts: a bank account and a brokerage
account. We
also invest in DRIPs, directly with the companies. Should I create a third account to hold our DRIP transactions? Do I need to record each DRIP in a separate account? Can I record the DRIPs on our brokerage account? What is the best practice? If you own an investment through a Dividend Reinvestment Plan Account
(DRIP) that investment should be set up just like all other investments within
bivio. It should not be set up as a cash account.
Having said that, purchases made thru DRIP's must be accounted for in a
somewhat different manner than the typical purchase of stock via your
broker. The reason for this difference is that there is often a
delay of several weeks or more between the time that you send the check to your
DRIP and when you receive confirmation as to the price paid and the number of
shares purchased. During this interim period cash has been removed from
your bank or broker cash account and placed into "suspense" until you receive
confirmation.
So, how do we account for this money that is placed into
"suspense"? The best way is to create another cash account
just for this purpose. You can name this additional account the
Suspense Account or any other appropriate name. This Suspense Account
will be nothing more than a temporary location to place cash funds that are
not deposits into one of your other cash accounts. The first step
when you send check to your DRIP is to simply enter a cash transfer from the
cash account that the funds are drawn from to the Suspense Account. Then,
when you receive a statement from the DRIP and enter the Buy transaction, select
the Suspense Account as the account from which money was withdrawn to fund the
purchase.
More information on the use of the Suspense
Account is available at https://www.bivio.com/hp/suspense-account.html
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