Company A has been covering all expenses/revenue for Company B, but Company B is ready to do it's own books

2 replies
22 views

Hey there,

We have two companies. One is much smaller, and only started in 2019. Company A has been funding Company B since 2019 and based on my accountants' suggestion, we have been booking everything to a Current Asset account called "Due to/from New company". Over the past few years, all expenses and revenue have just been plopped into that account.

We finally have a bank account and a separate Quickbooks account going for Company B, but I'm not exactly sure what the entry looks like on both sides to account for all of these entries.

I know that I can pull a report to show me all of the lines I need to enter in Company B for revenue and expenses but how do I get the total amount out of Company A and into Company B? What does that entry look like?

QuickBooks Online

Rustler

Level 15

The issue is that you can only file an amended tax return for the last three years, so you really can not enter all the transactions in the company B accounting file.

I would find the balance of the Due to/from account in company A.

Create a Due to/from asset account in company B

Do a journal entry in company B, if the balance in company A is positive (debit balance), then in company B debit Opening Balance Equity (OBE) and credit the Due to/from account. Then company B pays company A and uses that Due to/from account as the expense (reason) for the payment. Company A deposits the payment and uses the Due to/from account as the source account for the deposit.

If the balance in the Due to/from account in company A is negative (credit balance) reverse the entries in the above paragraph

AmandaNielsenAuthor

Thank you! My accountant finally got back to me and gave the same instructions. Appreciate your help!

Sign up

Login with SSO

Let's get you signed in

Login with SSO