we transfer funds from A entity to B,C, AND D entities ? I assume I need to use an intercompany accounts( DUE TO AND DUE FROM). A,B,C and D entities all use the different bank account. I'm not sure how to set it up and how to record the transactions in the books.
-- Edited by bluestone on Wednesday 20th of March 2013 02:21:25 AM
You will need to set up intercompany accounts within the nominal ledger. These should be around based around the debtors and creditors nominal ledger codes.
Company A
Given that Company A seems to be the main company, I would set up three separate intercompany accounts with companies B,C and D with a code in the debtors section.
A transfer from Company A to any of the other companies will just require a bank payment going to the relevant account.
COMPANIES B,C AND D
B.C and D will need to set up and intercompany account with A with a code in the creditors section.
If any of these companies receive any amounts from Company A then just post a bank receipt to the Company A Intercompany account.
When I do intercompany tfrs, I have just set them up as different accounts. As bank account code sit on the balance sheet anyway the transfer to a different bank account will be cr entity A bank account, Dr entity B/C/D or whatever - Obviously you will still need to reconcile these accounts from entity B/C/D side to make sure they all mirror the transactions.
Although, having said that, I have run software that has an intercompany tfr nominal code for this purpose too. not on the P&L side again though.
I can't see that it makes a difference other than preference. at least if they're bank accounts, you can reconcile them as you do the usual bank way.
