Two Companies, one owner


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Good day, I have a client with two companies 1) construction- limited 2) quantity surveying- sole trader, both companies work together in a sense most times expenses and incomes are moving through both companies. What I would like to know is when dealing with such situation how should I record these incomes and expenses moving from one company to the next.
 
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kirby

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you can use intercompany accounts

Let's say co A receives cash that belongs to Co B who has as an account receivable
Co A Books
Dr Cash 1,000
CR Due to Company B <1,000>

Co B Books
DR Due from Company A 1,000
CR Accts Receivable <1,000>

If Company A pays an expense for supplies that Company B should have paid

Co A Books
Dr Due From Company B 1,000
CR Cash <1,000>

Co B Books
DR Supplies Expense 1,000
CR Due to Company A <1,000>

Then periodically, have the two companies settle (pay off) the intercompany balances
 

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