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Intercompany

Intercompany

Situation.

Company A paid and settled an intercompany payable balance with company B, with a cash payment. The entry in company A was:

Cr Bank 

Dr I/c vendor account

However the cash never reached company B's bank account. At month end we have I/C mismatch between company A and B. How should we clear? My thoughts are posting an entry in company A either 

1) reverse the entry posted and repost: 

Cr Bank 

Dr Debtors sundry account 

2) post an entry Cr vendor (to clear the mismatch) Dr sundry debtors 

3)do nothing and leave an I/C mismatch at month end

No entry in company B to be posted. many thanks 

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10th Nov 2017 05:19

qwertyqwerty05 wrote:

No entry in company B to be posted. many thanks 

Why not? Cr Interco and Dr Cash in transit in B and the jobs done....

Thanks (1)
10th Nov 2017 07:50

Do you really mean “never”, or do you just mean that it was uncleared at the period end.

If the latter, the standard solution is to treat as cash in transit, as WT says.

Otherwise A posts the payment to sundry debtors pending the outcome of the investigation.

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to johngroganjga
10th Nov 2017 10:48

uncleared at the period end.
thank you

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By Briar
10th Nov 2017 16:06

If its only for monthly management accounts (and those will not be consolidated), who cares if the inter-co balances don't match (as long as you know what the difference is and that they will at the end of the next month)?

Why didn't they use online banking for the transfer so that there would be no uncleared entries in this regard at the month end?

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