Journal Entry

MichASR

Hi,

 

I am the bookkeeper for two seperate businesses that are owned by the same person. Therefore I have two seperate MYOB company files.  The owner has only just purchased the new business.

 

Occassionally one company (business A) might pay for the expenses of the other company (business and visa versa.

 

Can you please tell me what manual journal I should use to capture this? I believe I have to place it to a loan in Business A then enter it into Business B via a loan account (via a journal entry).  

 

Some guidance would be appreciated.

Tracey_H

Hi @MichASR 

 

Thanks for your post. One way to handle this situation is to create loan liability accounts for each company. So in Company A create a loan liability account for Company B and in Company B create a loan liability account for Company A. Make sure the Account Type is Credit card.

 

When Company A pays a Company B expense:

1. in Company B record the expense as you normally would. If you record a Spend Money transaction change the Pay from account to the Company A loan liability account. If you record a Purchase transaction when you record the Pay bills change the Pay from account to the Company A loan liability account.
2. in Company A record a spend money transaction with the Pay from account as the bank account and allocate to the Company B loan liability account

In Company B the expense will be correctly recorded as an expense of that business without affecting the bank account. In Company A the bank account will show the payment made without affecting the P&L. The loan liability accounts also allow you to keep track of the amounts each company 'owes' the other.

 

If Company B reimburses Company A:

1. in Company B record a Transfer money transaction from the bank account to the Company A loan liability account
2. in Company A record a Transfer money transaction from the Company B loan liability to the bank account

Please let me know if you need further help.

 

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