I'm trying to figure out how to do accounting for a brokerage account in Quickbooks, and I would appreciate any advice based on experience. What is throwing me off is that the brokerage statements are recording the change in the values of *unsold* stocks as part of the change of the account value.
The account in question has both cash and stock transactions mixed together under one account. The monthly statements don't do a great job of separating these activities, but you can more or less figure out the change in the cash and stock portions separately. In order to be able to reconcile the cash balances to the cash portion of the statement separately from the stock balances, I am thinking that it would be helpful to make the brokerage account a "parent" account of two separate children accounts, something like this:
Brokerage Acct 9199 Brokerage 9199 Cash Brokerage 9199 Stock
The parent account would show the overall account balance, while the cash and stock subaccounts would allow a more clean reconciliation of those entities. If I don't cleanly separate these subaccounts, I cannot easily reconcile to either the cash or stock balances for end of month that are recorded on the statement.
The cash portion of the account would have deposits, withdrawals, and interest, as usual, and what would be different than a typical cash account is that there would also be occasional "purchases" of stock. These I would just record as a single monthly transfer from the cash subaccount to the stock subaccount. I don't want to record microdetail of every stock transaction in Quickbooks....it's too much work to track it all there. Purchases are recorded on the statement as a lump sum amount, and I only want to reconcile to that.
In the stock account, we can record monthly the short term and long term capital gains, and those numbers are calculated by brokerage software that deals with the micro-details of individual stock transactions. Those would be recorded to "other income" accounts dealing with capital gains. I believe there is a number on the brokerage statement showing the value of stock sales, and this would be recorded as a separate transaction to transfer the money from stock sales into the cash account.
Now the final part of the equation is that the stock account changes value monthly as unsold stocks change their current value. Should I record the overall change in value of the stocks as a transaction to a balance sheet asset account named something like "Unrealized Capital Gains and Losses"?
Are the above transactions going to balance the account correctly, or am I leaving something out?