cancel
Showing results for 
Search instead for 
Did you mean: 
Highlighted
Not applicable

Intercompany "Loans"

We currently have multiple companys, all of which are corporations.  We frequently transfer funds between these companies with the intent of repaying.  Currently it appears that on Company A "invoices" are being entered thus setting up AP Liability for the vendor (Company A) that received the funds and that is being coded to due/to from on the vendor account.  On Company B there are "checks" written to Company A and coded to opposing due/to from account so nothing shows as due on either the vendor or customer.  While I understand neither are considered vendor or customer and technically the intercompany is in balance something just does not seem correct with this treatment.  All of this predates me and I just want to get the accounting corrected for the past and on a go-forward basis.  Would really appreciate any input.

 

Thanks!

2 Comments
Anonymous
Not applicable

Re: Intercompany "Loans"

I have found (with much experience) that interco accounts you intend to repay in cash can best be recorded in QB by treating them as a "CreditCard" account - even if the account carries a debit balance.
Vendor bills are always recorded as-issued by the co named on the vendor bill. When a different co pays the bill the payor co records a cash disbursement and debits its Interco CC. The 'named vendor co' records a bill payment using the IntercoCC as the payment method. This keeps everyone in balance.
Not applicable

Re: Intercompany "Loans"

Mike,

 

Thanks for the reply.  Digging deeper it appears I have bigger issues as on both Company A and Company B the person coding all of these transactions is debiting interco on both sides... with that being said (as I have much more cleanup to do than I first thought) I want to make sure I am presenting my case correctly and hoping you can relate back to me (aside from the obvious gl coding error) how to correct as I did not 100% understand your answer.  While I've been in accounting for several years, my QB experience was quite some time ago.

Here is how it is currently being recorded (which I know is not correct):

Company A, enter invoice to Company B, shows vendor balance of $1,000 due to Company B

$1,000     Due to/from interco

       ($1,000)      A/P

 

Company B, enter "check" to Company A, shows vendor balance of $0.00 due to Company A

$1,000    Due to/from interco

      ($1,000)    Cash

 

My thought is to do a JE to debit cash/cr interco on Company A and debit interco/credit cash on Company B and leave vendor out of it completely, as long as the interco is balanced regularly, just not sure this is proper accounting of this type of transaction?

 

Thanks,

Liz

Need to get in touch?

Contact us