Transferring funds between two companies within the same family

Hello,

We have two companies within the family, one run by my father and other by me . I have to transfer the funds from an order received on account of my father's firm from it's current account to me.

How should I do this? Transfer the amount into my current account and raise a bill to my father's firm? Or transfer into my Savings account without a bill? But how would this transaction be shown in their books?

Thanks,

KV

Replies (5)
Quick Summary
This discussion addresses how to properly transfer funds between two companies owned by the same family. The advice suggests treating the transaction as a standard sale and purchase, ensuring all accounting rules are followed for both payments and receipts. This approach helps maintain accurate financial records for both entities.

Make sale and purchase following all rules as you in normal sales and purchase transaction. Payments receipt and payment also as you do for regular sales and purchase transaction.

Originally posted by : Beriwal
Make sale and purchase following all rules as you in normal sales and purchase transaction. Payments receipt and payment also as you do for regular sales and purchase transaction.

What?

Debtor Purchases a/c

To Purchases a/c

this will derecognise the purchases

 Bank a/c

To Receivables a/c

Since your working on a software, simply

Bank a/c

To Purchases a/c

make a note of the transaction

There is another situation I remembered when you didn’t recognise purchases

Debtor a/c

To Bank a/c

then 

Bank a/c

To Debtor a/c

there is nothing wrong if you receive orders for other companies

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