Here are Intercompany Bank Transfer Journal Entry. Intercompany bank transfer occurs when funds are transferred between bank accounts of different entities within the same corporate group. Properly recording these transfers is essential for accurate financial reporting and reconciliation.
Example Scenario
Let’s assume Company A transfers ₹50,000 from its bank account to Company B’s bank account on 15-09-2024.
Journal Entry in Company A’s Books
Company A (the sender) needs to record the transfer out of its bank account.
| Date | Account Title | Debit (INR) | Credit (INR) | Description |
|---|---|---|---|---|
| 15-09-2024 | Intercompany Receivable | 50,000 | Amount due from Company B | |
| 15-09-2024 | To Bank | 50,000 | Transfer to Company B’s bank account |
Explanation:
- Intercompany Receivable (Debit): This increases the asset account, reflecting the amount owed by Company B.
- To Bank (Credit): This decreases the cash/bank account, reflecting the transfer of funds.
Journal Entry in Company B’s Books
Company B (the receiver) needs to record the receipt of funds into its bank account.
| Date | Account Title | Debit (INR) | Credit (INR) | Description |
|---|---|---|---|---|
| 15-09-2024 | Bank | 50,000 | Amount received from Company A | |
| 15-09-2024 | To Intercompany Payable | 50,000 | Amount owed to Company A |
Explanation:
- Bank (Debit): This increases the cash/bank account, reflecting the receipt of funds.
- To Intercompany Payable (Credit): This increases the liability account, reflecting the amount owed to Company A.
Conclusion
Recording intercompany bank transfers accurately is crucial for maintaining proper financial records and ensuring that all intercompany transactions are balanced. This practice helps in avoiding discrepancies and ensures transparency within the corporate group.