Canada Cash from long-term investment

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Hello there,

I have a question about a line:
L1: $200 is received from a long-term investment.

I can identifie easily the debit account: Cash (because it increased by $200) but I cannot indentifie the credit account. I do not know the origin of this transaction, is it from a sale or a dividend from a stock? I don't understand what does that mean.

How do you register this transaction in your case?

Thank you for your help!
 
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Unfortunately, you must investigate the origins of the amount received before you can confidently book this. In practice, i.e. investment administration, this occurs from time to time, so it's not uncommon. We would temporarily record this in a clearing account for bank reconciliation items while raising a query with the bank for more details on the nature and sender of the amount. Once we knew if the receipt was due to income distribution, a corporate action, or a normal sale transaction (which I doubt as some internal would know and hopefully notify you in advance), we could record it accurately.
 

DrStrangeLove

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Hello there,

I have a question about a line:
L1: $200 is received from a long-term investment.

I can identifie easily the debit account: Cash (because it increased by $200) but I cannot indentifie the credit account. I do not know the origin of this transaction, is it from a sale or a dividend from a stock? I don't understand what does that mean.

How do you register this transaction in your case?

Thank you for your help!
OP, is this a problem from a textbook? The way you phrased it, it sounds like a problem from a textbook. If this is a textbook problem, you should post such questions in the Exams and Studying section of the forum.

If this is from the sale of an investment (or a portion of it), then the cross-account is likely CR Investment.

If this cash is simply interest earned by the investment, the cross-account is likely CR Interest Revenue.
 

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