Entering journal entries to intercompany accounts

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As part of the monthly reconciliation process, review the Multi-company Reconciliation report and reconcile your intercompany accounts.

An intercompany bank transfer is the recommended method for reconciling these accounts because it makes both sides of the entry for you.

However, if you must cancel out losses and gains quickly, you can enter journal entries to the intercompany accounts.

You enter journal entries for one company at a time; you cannot enter them between companies. For example, to move a write-off from one company to another in your organization, enter a journal entry that removes the write-off from one company and enter a journal entry that adds the write-off to the other company.

Note:

The following steps describe the underlying processes of entering journal entries to intercompany accounts. They link to the Entering journal entries topic, which provides specific details on how to perform that task.

A journal entry for Company 1

  1. Enter a journal entry for Company 1, selecting the Intercompany Due To account and entering an amount in the Debit Amount column.
  2. To balance the entry, enter another transaction for Company 1, selecting the Intercompany Other Income account and entering the same amount in the Credit Amount column.

A journal entry for Company 2

  1. Enter a journal entry for Company 2, selecting the Intercompany Due From account and entering an amount in the Credit Amount column. This is the same amount that you entered for the Company 1 journal entry.
  2. To balance the entry, enter another transaction for Company 2, selecting the Intercompany Other Income account and entering the same amount in the Debit Amount column.

Example:

Company 1 owes $1,400 to Company 2 and is unable to pay.

Company 1 cancels out the loss.

  1. From the > Manage menu, click Journal Entries and select Company 1 from the Company field.
  2. From the Account field, select Intercompany Due To and enter 1400 in the Debit Amount field.
  3. Press the Tab key. A message appears, reminding you to enter an offset journal entry. Click OK.
  4. To balance the entry, from the Account field, select Intercompany Other Income and enter 1400 in the Credit Amount field.
  5. Press the Tab key, and click Save and Close.

Company 2 cancels out the gain.

  1. From the > Manage menu, click Journal Entries and select Company 2 from the Company field.
  2. From the Account field, select Intercompany Due From and enter 1400 in the Credit Amount field.
  3. Press the Tab key. A message appears, reminding you to enter an offset journal entry. Click OK.
  4. To balance the entry, from the Account field, select Intercompany Other Income and enter 1400 in the Debit Amount field.
  5. Press the Tab key, and click Save and Close.