Recording a Sell Transaction


I

ilyaz

I have Quicken 2003. When I download and try to record a transaction between
two of my accounts (sell in a money market fund and purchase in an equity
fund), I'm getting an error <You are recording a Sell Transaction that does
not have a corresponding buy>. In fact, I have substantial balance in the
money market, which is shown at the bottom of the register. Nevertheless,
every time I get this error. Any suggestion on how to correct this problem?
 
J

John Pollard

ilyaz said:
I have Quicken 2003. When I download and try to record a
transaction between two of my accounts (sell in a money market fund
and purchase in an equity fund), I'm getting an error <You are
recording a Sell Transaction that does not have a corresponding
buy>. In fact, I have substantial balance in the money market,
which is shown at the bottom of the register. Nevertheless, every
time I get this error. Any suggestion on how to correct this
problem?
(Assuming Q2003 works like Q2002), the cash balance at the bottom of
your investment account register is just what it says, a "cash"
balance; it does not include the value of any shares of any security,
including money market funds. If you are buying/selling shares of a
money market fund, you are purchasing/selling a security just as you
would any other security. If you never utilized the "cash" in your
account to purchase shares of the mm fund, then you have no shares to
sell.

You could probably leave things as they appear to be now and just
purchase the equity fund using the "cash" in your account. Or you
could use the cash to purchase shares in the mm fund (which you
certainly did in the real world at some time in the past), then sell
those shares to generate the cash to purchase the equity fund. But, I
would stick to one method or the other.
 
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I

ilyaz

John,
thanks for your message. Although I didn't quite understand the whole
explanation, I take your advise and leave things as they appear to be now.
Regards,
IZ
 
J

John Pollard

ilyaz said:
John,
thanks for your message. Although I didn't quite understand the
whole explanation, I take your advise and leave things as they
appear to be now. Regards,
IZ
Sorry if I didn't make things clearer; I'll give it one more shot as I
think it's probably something that you will want to understand.

The "Cash Balance" at the bottom of your register does not have
anything to do with the amount you have in your money market mutual
fund ... or the amount you have in any other mutual fund. It may be
easy to confuse cash and mm funds because shares of a money market
fund are always (we hope) worth exactly one dollar, making them appear
to be "cash". But your holdings in a money market fund are shares of
a security, just like the shares in other mutual funds you own.

You could send a $1000 check to your broker and tell him to buy 100
shares of some equity mutual fund at $10 a share. Or you could send a
$1000 check to your broker and tell him to buy 1000 shares of a money
market fund ... at $1 per share. It is the same type of transaction;
a purchase of shares of a security. It's just that the money market
fund is a security that always is worth $1 per share giving it the
"feel" of cash.

Brokerages are able to hold pure cash, however; in much the same way
that you hold cash in your checking account. When your funds are in
the form of cash at the brokerage, they will be included in the "Cash
Balance" at the bottom of your investment register. Before the days
of money market funds, I believe that all "cash" at brokerages was
really cash; now much of it is invested in money market funds.

If your broker sent you a transaction which "sold" shares of your
money market fund, that means that at some time in the past, you
"bought" shares of that money market fund. Chances are you have not
been recording those "buy" transactions in your Quicken investment
account register and that is why you now do not have any shares to
"sell".

As I said, you can just treat the mm fund shares as cash, though that
will mean that whenever your broker buys or sells money market fund
shares for you, you will get a buy or sell transaction downloaded that
you will have to make some modification to ... actually, you would
probably just delete them.

In the specific situation you mentioned in your original post, it
sounds like there were two transactions involved: a "sell" of some
money market fund shares, and a purchase of some equity fund shares.
If you chose to treat the shares of the money market fund which you
own at the brokerage as "cash", I think you can just delete the money
market "sell" transaction. That would leave the equity fund "buy"
transaction to get the cash it needs from your Quicken "cash" balance.

Using the $1000 example above: suppose you currently own 1000 shares
of the money market fund at the brokerage and suppose that you had
recorded the purchase of those shares in Quicken. Your Quicken "cash"
balance would be zero; your money market fund value would be $1000.
Then suppose you wanted to buy $1000 worth of shares in the equity
fund. You would enter a "sell" transaction for 1000 shares of the
money market fund which would place $1000 cash in your brokerage
account. Then you would enter a "buy" transaction for however many
shares of the equity fund you could buy with $1000 ... and that
transaction would reduce the cash in your investment account by $1000.
The net effect of the two transactions on your "cash" balance would be
zero.

But, since you never "bought" the money market fund shares *in
Quicken*, you now do not have any shares to sell in Quicken. Deleting
the downloaded money market sell transaction will cause the equity
fund "buy" transaction to reduce your current Quicken cash balance by
the amount you spent to buy the equity fund; which is, in essence,
the correct result.
 
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I

ilyaz

Wow, I got more, much more than I asked for! Thanks a lot for a wonderful
detailed explanation. I wish that my professors in a college some 50 years
ago were as articulate as you are!
After reading your last message, I went back to Quicken and looked into my
accounts again with a <microscope>. What I found surprised me: it was a
typo. A couple of years ago, I purchased several thousand shares in a money
market fund which I call "xyz MM". All these years, I recorded all
transactions manually. However, when I started to download and record
transactions automatically, the problem I asked about showed up. To make a
long research short, I found that I recorded purchase in "xyz M" fund, but
the program was trying to record automatically in the "xyz MM" fund. This
extra letter was a culprit!
Thanks to your message and emphasizing <the purchase>, I found the error and
corrected it! Your help is greatly appreciated.
Ilya
 

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