Recording purchase refundable share in another company (credit union)

#1

Quick question here: When I opened my business bank accounts I did so at a credit union. Credit Unions are only for members, so I purchased 1 (one) $1 membership share. The CU put this share in a special ‘membership shares’ account, and if I close all my [business --edit] accounts they will buy-back the share at the same price I paid.

How would I go about tracking this share? A special account under ‘Equity’ in my chart of accounts similar to how ‘regular’ shares are tracked (Shares, Setting up New company with 500 shares @$1000 each).

#2

How you account for this depends on who really purchased the share. If the business paid from company funds, it isn’t equity. It becomes a long-term asset, in the same way a deposit with a supplier is an asset. Eventually, you will get it back (at business windup).

If you paid personally, is the membership associated only with this account? Or does the membership entitle you to open many accounts, with this business account being one? (You mentioned “all my accounts.”) In that case, I wouldn’t consider the $1 a business transaction at all. You, as an individual, belong to the CU. The fact that you take advantage of that membership to get a free business account is immaterial in the business’ accounting records. You might just as easily keep all that money in your left front pocket as a petty cash fund. You could close the business account but keep personal accounts open, and the $1 would not be returned.

If you you personally bought the business a membership (which can’t happen at many credit unions) you should enter an expense claim, posting the transaction to that long-term asset account I mentioned above. The expense claim will be cleared either automatically to your capital account (if you have one) or by journal entry to owner’s equity, if that’s the way you are set up.

If I were you, I’d try hard to fit the transaction into the mold in my second paragraph. In other words, I’d look for a way to ignore it.

#3

The business (an incorporated entity) purchased the share, and I as the owner provided the capital for the business to do so. The share is refundable upon account close.

I’ll put it in as an ‘asset’. I had forgotten for a second that ‘equity’ is assets - liabilities.

#4

Out of naivete how would I (my company) ‘purchase’ this share in Manager? Create a ‘sales invoice’ or just use a journal entry?

This is what I came up with:
Deposit of funds:

image
image.png1462×825 40.6 KB

Share ‘Purchase’:

image
image.png978×754 17.1 KB

Account summary:

image
image.png1602×869 35.2 KB

On the surface it seems to show what I want it to show.

PS: I’m a bit neurotic, while I want my program to be simple to use, I “know” in about 5-7 years I’ll get audited (it just seems to happen to businesses of my kind around then) I would rather track too much than too little.

#5

Are you mixing different subjects into this forum topic? We were discussing a $1 membership share in the CU. But now you have introduced common stock shares, if I understand correctly.

Let me confine this response to the $1 CU membership. You would enter a Spend money bank or cash transaction. Allocate the payment (not a receipt) to the long-term Shares asset account you have obviously set up. End of story. No sales invoice or receipt. No journal entry, which you can’t use for bank or cash transactions anyway. No sales account involved.

If you have a different question, please start a new topic.

#6

@Tut, I was not trying to mix topics, I’m a giant idiot and got myself mentally confused and pasted the wrong screenshot. I amended the previous post to avoid confusing future readers.

I cannot ‘spend money’ the share away because it has already been recorded as a ‘bank account transaction’ in my transaction summary I imported. I just categorized it as a long-term asset as you suggested in a ‘shares’ account.

Unless I royally screwed up, I think this topic is done.

#7

Importing the transaction is the same as entering the transaction manually. And you can always edit or delete an imported transaction.