Paid an expense for company B
Needs to pay back Company A for the expense
Bill is not yet paid.
In QB, when entering in Bills it is not an Expense to Company B. Rather, it’s a Liability that is owed to Company A.
So, how to enter an unpaid bill (owed to Company A) from Company B without using an expense account?
I'm here to sort things out for you, @Bookkeeper222.
We can create a liability account. Here's how:
Then, let's enter the bill. Let me show you how:
You'll want to record what you owe your vendors in QuickBooks Desktop. Feel free to check this article for the details: Pay bills.
Keep in touch with me here if need clarifications in managing vendor transactions in QuickBooks. I always got your back. Wishing you and your business the best.
Let me add some details about recording transactions for both companies, @Bookkeeper222.
For company A, create a liability account called due. Then pay the company B expense using the liability account as the expense for the payment.
For company B, enter a payment to A in the amount of the expense paid. To do this, use the company expense account as the expense for the payment.
To see the complete list of workflows and other vendor-related transactions, you refer to Accounts Payable workflows.
Let me know if you have some clarifications with the process. I'll be glad to get back to you. Have a nice day ahead.
It is both an expense and a liability for company B.
In company A enter the bill and use an other asset account called "due from company B" instead of an expense account.
In company B you can do a journal entry debiting the expense account and crediting an other liability account "due to company A".
This is what I did so far:
In Company A Books.
Created a new A/R account called Due FROM Company B.
In the check written for the expense, I used the A/R account 'Due FROM Company B'.
Credit to cash (bank account), and debits the A/R account I created.
The balance sheet report for Company A shows the A/R due from Company B. It does NOT show up on the P&L for Company A which is what I wanted.
In Company B Books.
Created a A/P Account called Due TO Company A
Used a JE to debit the expense account, and credit the A/P account.
The P&L report shows the expenses, and the Balance Sheet report shows the Due to Company A as a liability.
But, then, when Company B actually makes the payment, I created a JE for the payment
Debits the A/P account
This zeroes out the A/P Account
You're almost there.
To reframe the situation: Company A has not paid an expense for Company B, it has loaned Company B money.
Company A is set up correctly.
Company B is not set up correctly. You should record the cash received from Company A as a debit to cash, credit to a liability account (you can use 'Record Deposits' and select the proper liability account under 'From Account') You used A/P, which works, but it's a loan so it really is an 'other current liability' or 'long term liability' if you won't be repaying it in the next year.
Then, just pay the expense in Company B as you normally do. At that point, you will have expensed it in Company B and both Company A & B will show respective Due From/Due to accounts on the balance sheet at the full amount loaned. Hope this helps.