Interest allocations

Interest amounts can be allocated to custodial accounts based on the total average daily balance. Interest is allocated to interest-bearing custodial accounts with these characteristics:

  • The threshold for average daily balance is met.
  • The same accounting entity and fund that is assigned to the pool of interest is assigned to the account.
  • The account is interest-bearing and is set up to receive interest.

The interest amount in the custodial account record is updated after the interest allocation is journalized and the journal is released. The allocated interest is posted to the custodial account record as an interest amount. The interest allocation journal is assigned a system code of CA and an event code of INT.

These methods can be used to reverse interest allocations:
  • The journal entry can be copied and the amounts reversed.

    See Reversing interest allocations.

  • The allocation line can be rerun with a reverse value in the Source Percentage.

Example

An interest allocation is created with these values:

  • Interest amount = $100.00
  • Accounting entity = 1
  • Fund = 1

This table shows the results of the interest allocation for custodial accounts and provides the reason why interest is not received on some accounts:

Custodial account Accounting entity Fund ADB Interest-bearing ADB threshold Interest received Reason Weight Interest allocated
1 1 1 1,000 Yes 500 Yes n/a 1,000 15.38
2 1 1 10,000 No n/a No Account is not interest bearing n/a 0
3 1 1 100 Yes 250 No ADB balance is under threshold n/a 0
4 1 2 750 Yes 250 No Fund is different n/a 0
5 2 1 800 Yes 250 No Accounting entity is different n/a 0
6 2 2 1,200 Yes 250 No Accounting entity and fund are different n/a 0
7 1 1 5,000 Yes n/a Yes n/a 5,000 76.92
8 1 1 500 Yes 250 Yes n/a 500 7.70 (rounding variance is added to last record)
Total 19,350.00 6,500 100