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Wannabe
Level 1

Class

One principal business and one subsidiary with separate bank accounts. Both have a shared expense. While "entering bill" cost is allocated to both and their respective classes (Principal and Subsidiary) applied respectively. Check is written from the principal business.

 

Now we have to write a check from the subsidiary to the principal business to pay off the liability created. 

Payor: Subsidiary 

Payee: Principal

Account column: Payee

Class column: ????...Should this be the Principal business or the subsidiary? Why?

 

Thank you for your help!

6 Comments
Teri
Level 9

Class

Are they separate tax ID's?  If so, suggest s/b not on same QB.

Wannabe
Level 1

Class

No, single tax ID.

MariaSoledadG
QuickBooks Team

Class

Hi there, Wannabe.

 

If you're referring to the Expense tab you use to provide information when writing a check, you'll have to provide the Principal's class tracking since you're paying the liability for them. 

 

However, I still recommend reaching out to your accountant for other ways on how to do it.

 

For future reference, please check these articles for more information about income and expenses

 

Let me know if you have any other questions. I'll always make sure to get back to you.

 

Wannabe
Level 1

Class

Thanks, I explained the scenario above. I agree with expense part. The question is when transferring funds from the "subsidiary" through "write check" what class do I use?

Teri
Level 9

Class

Most companies with intercompany subsidiaries do not bother to trade cash back and forth since no need.

If ultimately the financial statements will be consolidated, there is really no need for the extra accounting.

Most often we see intercompany TO/FROM accounts and maybe transfer cash once a year at year end but assuming you need separate balance sheets for each entity for some reason, and using classes to do that, then it would seem for a payment from one to the other that would be a debit one class and credit other. 

DR AP Interco - Class A

CR Cash account - Class A

DR Cash account - Class B

CR AR Interco - Class B

Wannabe
Level 1

Class

Here is the check I am writing to offset the shared expense already paid by the principal business - what class should I select - principal business or subsidiary business?

 

They have separate bank accounts but book keeping done and financial statements produced based on a single tax ID.

 

Picture of the check is attached.

 

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