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Post Info TOPIC: Adjustment between 2 companies - how?


Master Book-keeper

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Adjustment between 2 companies - how?
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I look after two companies (common directors).  They both received an invoice - same supplier, same amount, which were keyed correctly into Sage.   However they paid one invoice twice from one company (Company A) and not at all from the other (Company B).  The two payments were made just before year end (both year ends are the same).

Just a couple of days after the year end a payment was made from Company B to Company A and the supplier agreed to allocate the receipts properly at their end.

I use Sage so dont think I can adjust the Creditors control account so am wondered how I make adjusting entries to reflect the year end position with both companies, which will also ensure the supplier is showing as nil.  Can anyone please provide me with an idiots guide as Im having major brain block for some reason??

 

Thanks in advance



__________________

 Joanne 

Winner of Bookkeeper of the Year 2015, 2016 & 2017 

Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.

You should check out answers with reference to the legal position



Expert

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At the year end is there is an intercompany balance between company A, which has paid the invoice twice, and company B.  Lets assume the invoice is £100.

In company A there is a debit balance and in company B there is a credit balance.

Adjustments at year end would be as follows:

Company A - Bank Payment to intercompany account to result in the debit balance due from Company B of £100

Company B -

Dr 9999      £100

Cr Company A intercompany         £100

Dummy bank payment

Dr Creditors Control    £100

Cr Dummy Bank Account                £100

Then do a journal between dummy bank account and 9999 to clear them out

Dr Dummy Bank Account £100

Cr 9999                                          £100

So the net of the above adjustments is

Dr Creditors Control           £100

Cr Company A intercompany             £100

Which is what you want.  £nil invoice showing for creditor and balance due to Company A for the amount that it has paid twice. 

The after year end adjustment in company B will be

Dr Company A intercompany  £100

Cr  Bank                                             £100

 

Hopefully you can follow the above

 

Mark



__________________

Mark Stewart CA

http://stewartaccounting.co.uk/

Providing accounting, bookkeeping, payroll and tax services to small and medium sized businesses across Central Scotland and beyond.



Master Book-keeper

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Thank you Mark - very detailed and much appreciated! Phew!

__________________

 Joanne 

Winner of Bookkeeper of the Year 2015, 2016 & 2017 

Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.

You should check out answers with reference to the legal position

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