QuickBooks Online 2021 short term investment sale, including the recording of the gain or loss related to the sale of the short term investment. Let’s get into it with Intuit QuickBooks Online 2021. Here we are in our great guitars practice file, we’re going to be opening up our financial statements that being the balance sheet and income statement. So let’s go up top and duplicate our tabs to start off right clicking on the tab, duplicate the tab, we’re going to right click on the tab again, duplicate the tab.
Once again, we’re then going to go down to the reports on the left hand side, we’ll start off opening up our balance sheet, opening up the balance sheet and then we’re going to range change it up top having the ending date at 1231 to one and then run that report, close up the hamburger up top hold down Control, scroll up just a bit to get to that one to 5%.
Then we’re going to go to the next tab over and do the same thing, go down to the reports on the left hand side, we’re then going to go to the profit and loss PnL income statement report range, change it up top to 1231 to one ending date, run that report, close up the hamburger. And then let’s go back on over to the balance sheet to consider what we’re going to be doing here. In prior presentations, we recorded a short term investment. So we have our short term investment on the books, we’re imagining that we put that investment on the books in the form of stocks, so we have stocks and we’re going to be selling the stocks at this point in time recording the decrease to the investment and the related gain or loss on the sale of this stock.
Now just realize that as we put this stocks on the books, when you’re thinking about the investment, if you’re not in the business of investing in stocks and bonds, that’s not what your business is doing. In our case, we do guitars here, we sell guitars and possibly have Guitar Lessons we’ll add at a future point, then typically, you would then be taking the investments out of the business most likely, and then be putting them into stocks and bonds on the personal side unless we’re holding on to this money in the business in order to use pretty shortly within the business. And therefore we want to hold it in some other format, then cash within the business.
Also note that if you’re if you’re handling stocks and bonds, you might then use QuickBooks to to look at your stocks and bonds or manage your personal portfolio to some degree as well meaning make financial statements for your personal investments, where you might want to put the value of the stocks and bonds on the books as well. If that is the case, realize that QuickBooks is not the type of software that’s going to be tracking the stocks and bonds real time. If you want to do trading and things like that you want some other type of software to be tracking the stocks and bonds to help you out with the trades that you will be making.
QuickBooks will be there to value the stocks and bonds at a particular point in time at the end of the month or a year. So you might want to update them QuickBooks on a periodic type of basis to whatever the value of the stocks are, if you’re using it for that usage, also just want to realize that when you put the stocks on the books, there’s a tendency, you might want to say that you want all the detail of putting all the information of the stocks and bonds on the books.
And that’s probably not what you really want to do. Because it’s kind of tedious to do that, right. You want to be tracking the stocks and bonds possibly on the on the statements that are provided to you, or possibly with some other software, and then put the summary information into QuickBooks so that then you can you can realize and value your total assets in a nice snapshot type of format. So in other words, it might take your stocks and bonds and put like long term stocks, short term stocks, or take the grouping of the stocks that come on your statement.
And and put the general groups in place or possibly the whole thing in short term investments, long term investments, something like that, rather than trying to break out each individual account within QuickBooks. And that way, you can basically do a summary kind of thing within QuickBooks and value yourself at a snapshot. And then when you want to get into the details of each of the actual, you know, investment accounts, then you can go into the detail on the statement and so on.
Also note that another common kind of investment in what you often see in book problems would be say, to invest something in like a CD, a savings type of account. So if we took our money, we have a good amount of money that we’re going to use in the business, we wanted to save it somewhere else where we’re going to get a return, maybe we put it in like a CD type of account, which would pay us a fixed amount of interest.
And in that case, if we put something in an account, that’s going to give us a fixed amount of interest, we’d have something similar to the short term investment here. When it became due, it’s possible that the bank would just just take the amount that we invested plus the interest that we got, roll it back into the checking account automatically. We can kind of set it up if we’re in the same institution possibly to do that. And then we might see it on the bank reconciliation.
So many book problems will have that scenario on the bank reconciliation where we will see a deposit resulting from an investment that we put in place that was actually like a seed D, that maturity became due, and therefore we have the deposit go back into the checking account, and it included the interest. In that case, if that were to happen, we’d have to record the transaction, which would reduce the investment, we would increase the checking account for the amount of the amount we got back, including the interest.
And we would have to record the interest as well. If we’re talking about stocks that we sold, that’s what we’re going to imagine happening here, we’re gonna imagine we’re going to sell these stocks for the whole thing $12,250, we’re gonna say. So that means that these stocks have to go off the books, now we sold them, because we’re going to use the cash in the business, that’s why we have the assets on our business books, and then we’re going to sell the stocks, we’re going to get cash for 12,002 50.
And then we’re gonna have a gain of that 250, that we’re going to have to basically report somewhere. Now also, just note that you might realize or ask the question, what happens when there’s an increase in the value of the stock? But I have not yet sold it? In that case, you have a question of do I record the increase? What if this went up to 12,002 50? On the statement, the value of the stock is trading for 12,002 50? But I have not yet sold it? Shouldn’t I increase the value of the stock?
And there’s kind of different rules on that. So if you want to get into different rules on the reporting for business purposes of the valuation of stock, is it available for sale stock, or you’re holding it for long term, long term investment in that map, there’s more detail on that you get into the accounting courses to basically break out when you might not record the income. But just the general rule would be this, you can say, well, because it’s on the stock market trading on the stock market, you could basically increase this periodically.
And you might want to do it like monthly or something like that, when you get the statement to the fair market value, because we know what the value of the stock is, because it’s actually trading on the exchange. So if you were to do that, and you haven’t yet sold the stock, you can increase this by the 250, we’d say it would go up by 250, then the question is, what do I do with the other side of it? Do I record it as income, that’s what you would typically do. But you haven’t really realized it because you haven’t sold the stock.
And normally, in accounting, we in the US, at least, we don’t always record an income until we sell the stock. So you could put it as as income, like other income or unrealized income or something like that. Or the other option is to put the other side into basically the equity section down here, and recorded as basically the net in the equity section as unrealized income. Now, the easy thing to do would most likely be to record it as basically other income,
I would put it on the bottom of the income statement, so that it will show up not in your normal operating income, but down below in other income. And we’ll take a demonstration of that as we record our transaction as well. But again, we’re going to imagine that we sold the whole thing here for 12,002 50 actually got the cash for it. So let’s do that we’re going to go, let’s go back to the first tab, we’re going to hit the drop down, we’re looking at a deposit because we’re getting money.
Now note that if you if you use the deposit form, and it wasn’t linked, as we saw before, if it wasn’t linked to a received payment, or like an invoice, and a receipt payment or a a sales receipt type of form, then I would usually use the register. But because this one’s a little bit more complex complex, it has three accounts affected, it might be easier to use the deposit form. So this is a non normal transaction. It’s not a transaction that happens all the time. And therefore it doesn’t fit in our normal cycle.
If I jump on over to my, the desktop version, just to look at the cycles here. It doesn’t fit in the normal cycles for any of these particular forms. Because it’s not something that happens all the time that we sell stocks, but then I would ask is cash affected if cash is affected, then of course, we can use the register. Or we can use whatever the deposit or Expense Type forms, in this case, the deposit because cash will be going up. So I’m going to then close this out, we’re going to say this is going to be the checking account.
And I’m going to put this in as of let’s say February 2. So February what happened that went all the way I’m going to say, Oh 202 21 February 2, and these items up top represent the sales receipts or receive payment forms. We don’t want either of those, I want to go down to the accounts down below and just assign it directly to an account. So we’re gonna say that we’d received from I’m going to call it e trade, I think that’s who we got it from, wasn’t it? Let me check it out.
He trade. So I’ll just type in a trade. And there it is. So we’re gonna get that now they might not let us use a vendor here. So let’s see if they allow us to use the vendor for a deposit type of form. Because it’s actually a bank, not really a vendor or a customer. And so then we’re gonna say that the account will be going to the investment accounts, let’s type in the investment investment account, I think we call it short term investment. Yeah, there it is short term investment.
And that’s going to go down for the amount that’s in there. So let’s say that that’s going to be 12,000, the amount that’s in the short term investment, this is going to be what’s called electronic transfer. And then the next is from E trade, as well, what we have then is a gain or loss on the sale. So we probably don’t have a gain or loss type of account in here. So I’m going to go and say, we’re going to need to add it. So I’m going to say other interest others Nope, I’m gonna say gain, and then slash loss on sale of investment.
Now, we could have two accounts, either a gain account or a loss account, I’m going to group them together in one account here. So that whether it be a gain or loss, I’ll use the same account. And if it flips to a gain or loss, and that’s, that’s how we’ll see it, it’ll net the two out. So I’m going to say it’s not going to be an income account, I want to put it in other income, or or you can choose other expenses, because what I want is it to be on the bottom of the income statement.
Other income would still be below on the income statement, but it would be an income type of account other income, or we could use an other expense account, which again, will show up on kind of like the bottom. And it’s going to be similar to whether it’s going to be an income, whether we have a gain or a loss, which would be more appropriate on the expense. But if I choose either one, it’ll flip back and forth between between the two.
So I’m going to say other income at the bottom, keep it cold gain, loss on sale of investment, All right, we’ll say that, and that’s that, then it’s going to be for the 252 50. Okay, so what’s gonna happen when we record this, it’s a deposit, therefore, the checking accounts gonna go up by the 12,002 50, then the short term investment should go down by that 12,000. And the difference, then is going to go on the income statement for the gain or loss in the bottom of it at the 250.
Let’s save it and close it, and then check it out. So we’re going to go then back to the balance sheet and make it fresh. So we’re working with fresh stuff, and then go into the checking account, check out the checking, check it out, checking, and then go on the bottom of the checking, we got the E trade. So there’s the 12,002 50, for the full amount. If we go into it, of course, that will take us back to the deposit screen. And then I’m going to go back up close up the deposit screen.
And let’s go on back to the balance sheet. The other side was decreasing the investment account, which is now at zero. So there it is at zero. If I go into it, I see the detail. So it’s nice that it still shows me that zero amount, there’s there it is if I go back up on top, and let’s go to the profit and loss now the PnL the income statement, and refresh that report freshen it up and then down below, down in the bottom point we see this other so we have the other operating income.
And that’s going to be the 250. So if I go into that 250, there we have it. And in this case, it’s a game. So we have a gain going back. So So the reason we have it on the bottom there note that we can see now I’m going to hold down Ctrl and scroll up to that 125 I can see from operations at this point up to this point in time, I’ve got income up top, and then the expenses and down here I’ve got basically my my operating income.
And that basically tells me Hey, this is my income from just normal operations, not including like investment stuff, which isn’t really an operations that’s kind of you know, above and beyond are different than my normal operations. In other words, this gain or loss is weird. To some degree, it’s not part of my normal operations, I sold stock, which isn’t something I normally do. So I might possibly want to put it down on the bottom here to indicate that to myself.
So when I make decisions, I can kind of look at this top number to do so the same with the interest here. This is an interest expense on a loan. Now that might be somewhat similar year to year. So you might put it up top and the normal expenses. But it’s also something that’s not part of normal operations, it has to do with the financing that we need. So it might be something I want to put down at the bottom and say, Look, I don’t want to include that to kind of measure my normal performance and how I’m doing because that doesn’t have anything to do with my performance.
Really that has to do with the financing needs that I have. So you might put that on the bottom. Those are some reasons why you might put it down below. Okay, so now let’s go and open up the trial balance, I’m going to right click and duplicate the tab again, and just review where we are at. With the trusty t be the trustee trial balance, I’m going to type in the find field the trial balance.
Trials should be balanced. If you have a trial it should be balanced, fair and balanced trial. I’m going to say the end date is going to be 1230 121 and run that report. And there we have it. That’s what we got so far. I’ll print out the trial balance so you can check it out after each of these presentations whenever I would remember to do so. Which I’ve been doing pretty good at thus far.