Inter Company trnafer

Here are the journal entries for the two companies:

*ABC Company (paying on behalf of CBD Company)*

Debit: CBD Company (as a receivable or advance) Credit: Bank/Cash (the amount paid to WRC Company)

Example: Debit: CBD Company ( Advance) $XXXX Credit: Bank $XXXX *

WRC Company (receiving the payment)* Debit: Bank/Cash (the amount received from ABC Company) Credit: ABC Company (as a payable or trade payable)

Example: Debit: Bank $XXXX Credit: ABC Company (Trade Payable) $XXXX Note:

The entries assume that ABC Company is acting as an agent or intermediary on behalf of CBD Company. 

If there are any specific agreements or arrangements between the companies, the entries may vary. 

Additionally, the entries may need to be adjusted based on the nature of the transaction and the accounting policies of the companies involved. 

In ABC’s books, record the payment as a receivable from CBD, since ABC paid on CBD’s behalf: Dr CBD Company A/c; Cr Bank A/c. In CBD’s books, record the liability to ABC and the relevant underlying expense, asset or payable: Dr relevant expense/asset/payable A/c; Cr ABC Company A/c. If WRC was the actual supplier or creditor, CBD’s entry may instead clear its payable to WRC. WRC’s books depend on whether it received the money and what that payment settled.

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