best way to track t-bills


R

RJ

What is the best way to manage/track Treasury Bills or Notes (specifically
T-BILLs) in Quicken 2004?

Thanks in advance for any responses.

--RJ
 
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M

Mike B

RJ said:
What is the best way to manage/track Treasury Bills or Notes
(specifically T-BILLs) in Quicken 2004?

Thanks in advance for any responses.
Just the way the Help files suggest.
 
D

danbrown

Make up your mind ... Notes or Bills.

Notes are interest bearing.

Bills are discounted.

EXTREMELY different animals
 
J

JB

RJ said:
What is the best way to manage/track Treasury Bills or Notes (specifically
T-BILLs) in Quicken 2004?

Thanks in advance for any responses.

--RJ
I don't know the *best* way but I use a method for tbills that keeps the
account balances in agreement with both the treasury statements and the
source banks.

My way involves using an investment account and buying the bill as though it
were a bond using the actual price paid. I then add a misc cash offset to
bring the account balance up to par.

At maturity I sell the tbill at it's purchase price (not par), post an
income payment and remove the original offset. Using the return-of-capital
function seems logical for this but my recollection is the cash balance does
not change as it should.

I found Quicken's help to be too vague to be of much value. Perhaps an
accountant will advise us on the best way.
 
M

Mike B

JB said:
I don't know the *best* way but I use a method for tbills that keeps
the account balances in agreement with both the treasury statements
and the source banks.

My way involves using an investment account and buying the bill as
though it were a bond using the actual price paid. I then add a misc
cash offset to bring the account balance up to par.

At maturity I sell the tbill at it's purchase price (not par), post
an income payment and remove the original offset. Using the
return-of-capital function seems logical for this but my recollection
is the cash balance does not change as it should.

I found Quicken's help to be too vague to be of much value. Perhaps
an accountant will advise us on the best way.
Your way is as the Quicken help process recommends IIRC.
 
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D

danbrown

With regard to T-Bills, the question becomes one of mechanics ... i.e.,
in what manner did you purchase the instrument.

If you bought it thru a bank or brokerage, they probably only charged
you the discounted value (and, probably, a commission). In this case,
just create the new security (don't re-use prior T-Bill securitys ...
it just gets messy), and execute a buy. When it matures, record an
Interest Rec'd and a sale at the original value -- so that the 2
amounts sum to the face value of the T-Bill.

Where it gets weird is if you participate in the "Treasury Direct"
program (or, if your bank does so on your behalf). In that case, you
pay the face value up front and, upon purchase, the Treasury refunds
the part it didn't need for the purchase. Except this amount is
exactly the same as the interest you'll eventually receive at maturity.


I believe that the simplest way to record this is to post the initial
amount (i.e., the face value) to a receivables account and then, once
you receive the actual amounts, record it exactly the same as I stated
above (using the receivables account as the source of funds for the Inv
purchase). When you receive the refund check, just record it as a
deposit to your bank from the receivables.
 
M

Mike B

danbrown said:
With regard to T-Bills, the question becomes one of mechanics ...
i.e., in what manner did you purchase the instrument.

If you bought it thru a bank or brokerage, they probably only charged
you the discounted value (and, probably, a commission). In this case,
just create the new security (don't re-use prior T-Bill securitys ...
it just gets messy), and execute a buy. When it matures, record an
Interest Rec'd and a sale at the original value -- so that the 2
amounts sum to the face value of the T-Bill.

Where it gets weird is if you participate in the "Treasury Direct"
program (or, if your bank does so on your behalf). In that case, you
pay the face value up front and, upon purchase, the Treasury refunds
the part it didn't need for the purchase. Except this amount is
exactly the same as the interest you'll eventually receive at
maturity.


I believe that the simplest way to record this is to post the initial
amount (i.e., the face value) to a receivables account and then, once
you receive the actual amounts, record it exactly the same as I stated
above (using the receivables account as the source of funds for the
Inv purchase). When you receive the refund check, just record it as a
deposit to your bank from the receivables.
Is a "return of capital" taxable? Why not show the refund as that?
 
D

danbrown

It's probably a matter of definition as much as anything. Since the
refund was, technically, never invested, I wouldn't use ROC.
 
J

Jerry Boyle

danbrown said:
[snip]

I believe that the simplest way to record this is to post the initial
amount (i.e., the face value) to a receivables account and then, once
you receive the actual amounts, record it exactly the same as I stated
above (using the receivables account as the source of funds for the Inv
purchase). When you receive the refund check, just record it as a
deposit to your bank from the receivables.
I set up a separate Treasury Direct account and have the discount amount
direct deposited to my checking account.

When I buy a new T-bill I transfer the face value into my TD account then
enter the following 4 transactions:

<purchase date> Buy Tbill @ <purchase price>
<purchase date> Xout to checking account <discount amount>
<maturity date> Sell Tbill @ <purchase price>
<maturity date> IntInc <discount amount>

If I reinvest the T-bill I create a new T-bill security whose purchase date
is the maturity date of the old T-bill and enter the same 4 transactions
for the new T-bill.

If I don't reinvest I Xout the <face value> on the maturity date.

This method records the investment income as interest earned on the maturity
date of the T-bill, which is per IRS specs.
 
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D

danbrown

Jerry,
That's an elegant variation on what I was proposing.

And one that makes MUCH sense, since the "Treasury Direct" account IS
it's own investment account (that's held at the Fed instead of being
held at one's bank or broker).

Dan
 

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