Examples of Due To/Due From scenarios
The following examples outline several Due To/Due From scenarios for entities A, B, and C. For simplicity, each entity's alphabetic designation indicates the entity's corresponding GL account numbers.
The GL accounts used in the examples are as follows:
|
|
Entity A |
Entity B |
Entity C |
|---|---|---|---|
|
Cash |
A-1100 |
B-1100 |
C-1100 |
|
Accounts Receivable |
A-1200 |
B-1200 |
C-1200 |
|
Inventory |
A-1300 |
B-1300 |
C-1300 |
|
Income |
A-4000 |
B-4000 |
C-4000 |
|
Cost of Goods Sold |
A-5200 |
B-5200 |
C-5200 |
The inter-company Due To/Due From accounts are as follows:
|
|
Entity A |
Entity B |
Entity C |
|---|---|---|---|
|
Due From Entity A |
N/A |
B-1501 |
C-1501 |
|
Due From Entity B |
A-1502 |
N/A |
C-1502 |
|
Due From Entity C |
A-1503 |
B-1503 |
N/A |
|
Due To Entity A |
N/A |
B-2501 |
C-2501 |
|
Due To Entity B |
A-2502 |
N/A |
C-2502 |
|
Due To Entity C |
A-2503 |
B-2503 |
N/A |
The products and their entities are as follows:
- Product A - Unit Price of 50.00, assigned to Entity A
- Product B - Unit Price of 100.00, assigned to Entity B
Example 1
Non-prepaid order for Product A and Product B - The invoice sales transaction is as follows:
|
|
Debit |
Credit |
|---|---|---|
|
A-1200 - Accounts Receivable (Entity A) |
150.00 |
|
|
A-4000 - Product A Sales (Entity A) |
|
50.00 |
|
B-4000 - Product B Sales (Entity B) |
|
100.00 |
Because Entity A (assigned to the first line item, Product A) receives the full debit to Accounts Receivable, Entity A incurs an inter-company liability to Entity B, which receives a credit to Income of 100.00. This sales transaction generates the following Due To/Due From entry:
|
|
Debit |
Credit |
|---|---|---|
|
B-1501 - Due From Entity A (Entity B) |
100.00 |
|
|
A-2502 - Due To Entity B (Entity A) |
|
100.00 |
Example 2
Prepaid order for Product A for which the funds are deposited into Entity C's bank account - If the payment is processed and recorded when the order is shipped, the invoice sales transaction is as follows:
|
|
Debit |
Credit |
|---|---|---|
|
C-1100 - Cash (Entity C) |
50.00 |
|
|
A-4000 - Product A Sales (Entity A) |
|
50.00 |
In this example, Entity A receives a credit to Income of 50.00 for the sale of Product A, while Entity C receives the debit to Cash. The inter-company Due To/Due From balancing transaction that results is as follows:
|
|
Debit |
Credit |
|---|---|---|
|
A-1503 - Due From Entity C (Entity A) |
50.00 |
|
|
C-2501 - Due To Entity A (Entity C) |
|
50.00 |
Example 3
(This example combines the scenarios for Examples 1 and 2)
Prepaid order for Product A and Product B for which the funds are deposited into Entity C's bank account - If the payment is processed and recorded when the order is shipped, the invoice sales transaction is as follows:
|
|
Debit |
Credit |
|---|---|---|
|
C-1100 - Cash (Entity C) |
150.00 |
|
|
A-4000 - Product A Sales (Entity A) |
|
50.00 |
|
B-4000 - Product B Sales (Entity B) |
|
100.00 |
The Due To/Due From transaction generated from this example is similar to a combination of the two inter-company transactions generated in the earlier examples:
|
|
Debit |
Credit |
|---|---|---|
|
A-1503 - Due From Entity C (Entity A) |
150.00 |
|
|
A-2502 - Due To Entity B (Entity A) |
|
100.00 |
|
C-2501 - Due To Entity A (Entity C) |
|
150.00 |