Issue/Symptom/Question

How do we clear Inter-company balances from the Agings? We have companies that are closed/liquidated and need to zero out the balance sheet and record gains and losses on companies still operating.

Applies To

Intercompany Accounts Payable

Intercompany Accounts Receivable

Resolution/Fix/Answer

Example Scenario Assumptions:

Company 200

Owes Company 100 - $10,000

Is Owed by Company 100 - $3,000

Net: Company 200 owes Company 100: $7,000 (Company 200 Payable to Company 100) - "Due to Company 100"

Company 100

Owes Company 200 - $3,000

Is Owed by Company 200 - $10,000

Net: Company 100 is owed by Company 200: $7,000 (Company 100 Receivable from Company 200) - "Due from Company 200"

Step 1: Offset the Intercompany Payables and Intercompany Receivables (Due To/Due From) between the two BS OUs. Using the example above, this will be $3,000

Company 200

Record a net zero dollar cash receipt - Cash Receipt window

Debit: Inter Company Clearing Account $3,000

Credit: Due From Company 100 $3,000

Record a net zero dollar manual AP Payment - Manual Payment window

Debit: Due To Company 100 $3,000

Credit: Inter Company Clearing Account $3,000

Company 100

Record a net zero dollar cash receipt - Cash Receipts window

Debit: Inter Company Clearing Account $3,000

Credit: Due From Company 200 $3,000

Record a net zero dollar manual AP Payment - Manual Payment window

Debit: Due To Company 200 $3,000

Credit: Inter Company Clearing Account $3,000

Step 2: Process payment in Company 200 for $7,000 to the Company 100’s Vendor using PENTA’s AP automated check process. Company 200 is paying Company 100 $7,000 in this step.

Accounting Entries created in Company 200 (AP Automated Check Processing)

Debit: Due To Company 100 $7,000

Credit: Cash $7,000

Step 3: Process a cash receipt in Company 100 in the amount that Company 200 is paying Company 100 ($7,000). Company 100 is receiving payment from Company 200 in this step.

Accounting Entries created in Company 100 (Cash Receipts)

Debit: Cash $7,000

Credit: Due From Company 200 $7,000

Recording a Gain/Loss to write off Intercompany Payables/Receivables

Company 200 currently has intercompany payables to company 100. However, company 200 is no longer active and no longer has a cash account to pay company 100. As a result, the intercompany AP/AR will need to be offset by a gain/loss in each company in order for them to be ‘cleared’ out.

Using the same assumptions as listed above, the first step will be to follow ‘Step 1’ above which will serve to net out the intercompany AP and intercompany AR within each company. Once this is complete, there should only be Intercompany Payables on the balance sheet of OU 200.

At this point, the following entries should remove the Intercompany balances and offset those balances against the gain/loss account.

Company 200

Record a net zero dollar manual AP Payment - Manual Payment window

Debit: Due To Company 100 $7,000

Credit: Gain (non-edit rule account) $7,000

Company 100

Record a net zero dollar cash receipt - Cash Receipts window

Debit: Loss (non-edit rule account) $7,000

Credit: Due From Company 200 $7,000

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