USA How to record transfer of monies from one company to another.

[TooManyHats]

Hello,

Company A did not have a credit card yet. Company B did. Company A transferred monies to Company B so B could pay some of A's bills requiring a credit card. How should the following transactions be recorded in both companies? 1. Monies out of A. 2. Monies in to B. 3. Bills paid by B.

Thanks much!

 

[kirby]

1. A sent $100 to B

Books of A
DR Due from Co B $100
CR Cash $100

Books of B
DR Cash $100
CR Due to Co A $100



2. Co B pays $80 supplies exp for A using a Credit Card and tells A this

Books of CO A
DR Expense $80
CR Due from B $80

Books of CO B
DR Due to A $80
CR Credit Card payable $80

 

[Marshall]

I think # 2 should read "Co A uses credit card to charge $80 supplies and tells Co B"

Then add a third:

3. Co B pays $80 Credit Card

Books of CO A
No entry needed

Books of CO B
DR Credit Card payable $80
CR Cash $80

 

[kirby]

But the first statement is that "Co A does not have a credit card yet" so how can A use a credit card? B uses the credit card for A

 

[Marshall]

You are right. #2 should be "B uses the credit card to charge $80 supplies for A".

I was thinking that A would use B's card to buy the supplies which is what we do in my office - my office manager uses my card to buy the supplies for the company when we need to use a credit card and she tells me about it, rather than have me use my card to buy the supplies.

 

[Triest123]

Hello,

Company A did not have a credit card yet. Company B did. Company A transferred monies to Company B so B could pay some of A's bills requiring a credit card. How should the following transactions be recorded in both companies? 1. Monies out of A. 2. Monies in to B. 3. Bills paid by B.

Thanks much!

1. Monies out of A. (Say $1,000)
Dr Company B $1,000
Cr Bank $1,000
Being the fund transfer to Company B

2. Monies in to B.
Dr Bank $1,000
Cr Company A $1,000
Being the fund transfer from Company A

3. Bills paid by B. (Say 1,000)

In Company B's Book
Dr Company A $1,000
Cr Credit card payable $1,000
Being the expenses paid on behalf of Company A by visa card

In Company A's Book
Dr Expenses $1,000
Cr Company B $1,000
Being the expenses paid by Company B

(4) When Company B settle the visa payment

Dr Credit Card Payable $1,000
Cr Bank $1,000
Being settled the credit card payment