Questions on Debit & Credit Journal Entries.

USA Discussion in 'General Accountancy Discussion' started by Jasmine2018, Nov 23, 2018.

  1. Jasmine2018

    Jasmine2018

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    I have a situation where our inter-company short pay one of our invoices then they turn around and billed us in the amount that they were short paid us. I need help to make sure that I book them correctly. I appreciate very much for your help.

    Two sister companies A&B, Company A back charge Company B for Consultant Fees for the month of July 2018 in the amount of 20K. Company A record:
    Debit Inter-Company AR $20k
    Credit Inter-Company AP (20k) (is this entry correct?) Yes, No

    Company A received Payment from Company B in the amount of 10K. Company A record:
    Debit Cash $10k
    Credit Inter-Company AR $10k (is this entry correct?) Yes, No

    Company A received an invoice from Company B in the amount of 10K. Company A record:
    Debit Consultant Fee Expense $10k
    Credit Inter-Company AP $10k (is this entry correct?) Yes, No

    Company A issued a credit memo for Company B in the amount of 10k (the amount that Company B short paid). Company A record:
    Debit Inter-Company AP $10k
    Credit Inter-Company AR $10k (is this entry correct?) Yes, No

    Company A issued the credit memo in the amount of $10k, this credit will offset the invoice that Company B billed Company A. It is a wash. Do I need any Journal Entry when I apply the credit against the invoice?
    Please advise.
    Thank you.
     
    Jasmine2018, Nov 23, 2018
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