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Describing Bond Interest and Return of Capital

Distributions Most bonds pay monthly or semiannual interest. In addition, some bonds—for example, mortgage-backed securities such as GNMA bonds—return a portion of the bond principal with each interest payment.

NOTE:

The 1099 statement, and probably also your brokerage statement, should tell you what kind of distribution you’ve received. As with other investment transactions, you have a choice as to how you record bond interest and return of capital transactions. You can enter these transactions directly into the register, or you can use an investment form.

To record an interest payment, click the Easy Actions menu and then click Record An Income Event.

In the Record Income dialog box, identify the interest payment date, the security paying the interest, and the amount. Fill in the Record Income dialog box’s text boxes. The steps for recording bond income are similar to those for recording stock or mutual fund income.

To record a return of capital distribution, including the payment of interest you previously accrued, click the Easy Actions menu and then click Return Of Capital. In the

Return Of Capital dialog box, give the interest payment date, name the security paying the interest, and indicate the amount of previously accrued interest you’re now receiving.

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