Clearing Intercompany payable and receivable accounts

[Former Member]

Hi All,

We don't have consolidation module. I would like to know how to clear off the inter company payable and receivable GLs at the end of the month.

The intercompany accounts are hit for example when I post entry like below:

Debit Expense     Company code 1000

Credit Bank          Company code 2000

Auto entries generated:

Credit Intercompany     Co Code 1000

Debit Intercompany      Co Code 2000

So how do I clear off these transactions please help ? I don't have consolidation modules so I don't use F.2E.

Thanks in advance !

[former_member198650]

Hi Satan,

Generally inter company payables & receivables are adjusted by receiving/paying off the balance or capitalize it in respective company codes.

Suppose if payables are outstanding in one co.code, then you have to create a GL account under investments or loan and advances and post it to this GL and same thing will do for receivables also.

Regards,

Mukthar

[Former Member]

Thanks all you guys for the helpful responses

[Marssel700]

Hi,

take a look on this link. You will have a good scenario for processing understanding

regards

[Former Member]

Dear Marssel,

Thanks for the reply. I had seen this before and my question is after there are entries in Intercompany accounts how do we clear them off and make them zero.

For Example

I have 1000 USD as Inter company receivable

and 500 USD as Intercompany payable how to clear off these in one company code. ?

[former_member198650]

Hi Satan,

We have to create 2 GL accounts with inter company name. One is under liabilities side in non-current liabilities schedule and another one is non current asset at asset side. When the receivables is greater than to liabilities, then you to book below accounting entry:

Inter company payable A/c Dr   500 USD

Inter company name/Bank A/c Dr 500 USD (If you receive the balance amount then you can debit to bank)

Inter company receivable A/c Cr  1000 USD

Regards,

Mukthar

[former_member200703]

Hi

May i ask you what is the relationship between these two company codes? is they inter-company transaction or two related parties companies?

its depending on the accounting definition of this relation between two companies, this balance would be netted against each other out of books while preparing consolidated financial statement only in case of inter-company relationship..

in case of related parties relationship this balance would be disclosed under current Asset/Liability in section related parties. as every company and its subsidies would issue a separate financial statement, 

so in my opinion no accounting JV would be posted to settle this balance between two companies till one of them pay to another her debt..

Regards

Mahmoud El Nady

[Former Member]

Hi Mahmoud,

There are two entities belonging to same group. There is no consolidation module configured.

The JV I mentioned is for paying off the other company to the extent of liability which will again generate entries in the intercompany accounts which can then be cleared off.

[former_member198650]

What entry you will post? First clarify us.

[Marssel700]

Insomniac,

You can clear off those open items using your intercompany accounts. The will remain USD 500 to be received.

In order to receive this amount in a simple standard way you can create a Customer master record as Company Code to enable EDI file via F110, or execute manual incoming payment through F-28 allowing multiple company codes.

regards