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Level 1

Company A Paid an expense for company B

Company A

Paid an expense for company B

 

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?

7 Comments
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QuickBooks Team

Company A Paid an expense for company B

I'm here to sort things out for you, @Bookkeeper222.

 

We can create a liability account. Here's how: 

  1. Go to Lists at the top menu, then choose Chart of Accounts.
  2. Select the Account drop-down at the bottom, then choose New to create a new account.
  3. Select an account type, then Continue.
  4. Enter the account details.
  5. Once done, click Save & Close.

Then, let's enter the bill. Let me show you how: 

  1. From the Vendors menu, chose Enter bills.
  2. Select the vendor and then enter the Date.
  3. Choose the account or the item.
  4. Enter the amount.
  5. If you are tracking billable expenses, select the customer job, and put a checkmark in the Billable column.
  6. Once finished, click Save & Close.

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.

Highlighted
Level 1

Company A Paid an expense for company B

There are two sets of books.  You are not answering the question of how it relates to the two sets of books. 

Highlighted
QuickBooks Team

Company A Paid an expense for company B

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. 

Highlighted
Level 1

Company A Paid an expense for company B

Sorry this doesn't help, if you re-read the question, you will see:

 

Bill is not yet paid.

 

So Company B still owes this to Company A, the check has not been written. 

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Level 4

Company A Paid an expense for company B

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".

Highlighted
Level 1

Company A Paid an expense for company B

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

Credits Cash

Debits the A/P account

This zeroes out the A/P Account

 

Highlighted
Level 1

Company A Paid an expense for company B

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. 

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