USA AJEs between 2 unrelated companies

[NYC Numbers]

Good morning,

I am currently working with a client that has two separate companies. One an LLC, the other an SCorp. Both companies have the same Distributor. Unfortunately, the Distributor could only wire sales to one bank account, although the Sales Statements were kept on separate Statements. So, on a monthly basis for two years, we have two unrelated companies, two separate sales statements, wired into one bank account by the Distributor.

There is one further complication. The owner did not wire/distribute the funds after the funds were deposited into the one bank, but did so in different increments sporadically throughout the year.

My question, can I make AJEs on a monthly basis, to record the correct sales for each company. Below is a sample of the entries I plan: The L/E accounts for each company will zero out when I separate them for the future.

Sample Month
Sales LLC 10
Sales SCorp 25
Total Deposit in LLC Bank 35

AJEs for LLC
Debit Sales LLC 10
Debit SCorp L/E 25
Credit Bank 35

AJEs for SCorp
Debit Sales SCorp 25
Credit L/E 25

 

[kirby]

I suggest to NOT make adjusting entries to cash that were not true cash movements. Just use intercompany accounts. Then settle the net cash difference by a payment when you are done.

 

[NYC Numbers]

But these companies are not related.

 

[kirby]

if they are owned by the same client they are related (same “parent”). If the term intercompany bothers you then just use “payable” and “receivable” accounts. Most important, do not make entries to cash that were not true cash movements. If you don’t know why not ask your atty about NY state law 175.05. Use payable and receivable accounts between LLC and Scorp for each month then settle the net cash difference in the current month when you are done.

 

[NYC Numbers]

I really appreciate your advice. I will inform myself about the law article cited. I will use AR and AP instead of Cash.