Inter Company Journal Entry
An Inter Company Journal Entry is done between organizations that belong to the same group.
To access the Journal Entry list, go to:
Home > Accounting > Company and Accounts > Journal Entry
1. Prerequisites
Before creating an Inter Company Journal Entry, you need the following:
- At least two Companies
2. How to create an Inter Company Journal Entry
- Navigate to the Journal Entry list and initiate a new entry. Choose ‘Inter Company Journal Entry’ as the Entry Type.
- Specify the Company responsible for procuring items on behalf of another company.
- Add individual rows for each accounting entry, ensuring that only inter-company accounts are available for selection.
- For each row, provide the following details: The Internal account affected. The amount to be debited or credited. The Cost Center (if applicable for Income or Expense entries).
- Upon submission of the Journal Entry, locate the ‘Make Inter Company Journal Entry’ button in the top right corner.
- Click on the button, then proceed to select the Company for which you intend to create the linked Journal Entry.
- Upon selection, you will be directed to another Journal Entry screen where relevant fields such as Company, Voucher Type, and Inter Company Journal Entry Reference will be pre-filled.
- Select the internal accounts for the second Company within the provided table.
- Submit the Journal Entry, ensuring that the total Debit and Credit amounts match those of the previously created Journal Entry, albeit with opposite debits and credits.
Note: The entries in the second Journal Entry should mirror the opposite of those made in the first Journal Entry. For instance, let’s consider a scenario where Company A is purchasing goods from Company B. Here’s how the payment cycle between the two companies would appear using Inter Company Journal Entry:
- Debit Bank Account by 500 and credit Debtors account of Company B by 500.
- Subsequently, in the Inter Company Journal Entry, debit Creditors account of Company A by 500 and credit Bank Account by 500.
- Before proceeding with the Journal Entry, ensure to select the appropriate parties for both the Creditors and Debtors accounts.
Additionally, a reference link is provided at the bottom, which will be included in both linked Journal Entries and will be removed if either of the Journal Entries is cancelled.