iNTERCOMPANY ACCTS – DUE TO/DUE FROM

Question:

When paying intercompany accts in Comp A  I enter the transaction as DUE TO/DUE FROM.

Then in the COMP B  books I have to do a JE to move it to the appropriate acct.

Is the Due TO/Due FROM acct in Comp B a Credit and a Debit to the appropriate acct?

Just want to make sure it is entered correctly.

Answer:

On Company A record:

  • I/C Receivable from Company B (asset on B/S)  >>> $10,000 (for example)

On Company B record:

  • I/C Payable to Company A (Liability on B/S)  >>> $10,000 (for example)

Note: whoever doing consolidation, will write I/C elimination entry and the balance becomes zero.