2 Company books. Need Help with Sales Entry

[Paccountant]

Hello all,

I need help. I work with 1 company but have 2 sets of books.

When we receive sales, we receive sales through company A.

Once we receive money, we transfer the sales to company B.

When producing an entry for company A, of course I debit cash, and credit sales.

When transferring the money from company A to company B,

do I also debit cash and credit sales?

Doing so will double the income when filing.

Any help will be great. Thank you

 

[LYAK]

Are the financial statements consolidated when they are published? If so, I would credit revenue and debit cash per company B and then record elimination entries for the intercompany transfers prior to creating the financial statements. I'm not sure if this is proper accounting treatment; I would wait for Kirby or Counterofbeans to answer this question, as they are much more knowledgeable than I am.

 

[Gerald]

You don't mention what the relationship is between the companies.
If company B is doing something for company A and recording revenue, then company A records an expense. In any kind of consolidation (filing, as you infer) the expenses of A cancel with the revenues of B. The only revenue showing up is what A receives.

If company A is merely transferring money to B - B is not performing services for A, A records an intercompany receivable from B and B records an intercompany payable to A. This would also cancel each other in a consolidation.

Off the top of my head, I would say that if the other side of the entry hits a balance sheet account for A, B's entry should hit the balance sheet as well.

If A's entry hits a P&L account, then Bs entry should likewise hit a P&L account.

 

[bklynboy]

Paccountant - your question is not very clear why you transfer sales to another company. You should record the sale in the company where the product or service is provided. Is Company A is acting as the distribution arm for Company B? I would also need to know what the service agreement is between these 2 entities and if stand alone financials are prepared for each company.

 

[saad25]

Rule of thumb...When dealing with Intercompanies in the P& L it will be either in one company or another........... when it comes to balance sheet it will appear in both with the balance being Debit in one and Credit in another or the other way around....