I believe these are the entries being discussed here:
Company A:
Debits Expense or Asset for AMEX purchases $700*
Credits CC liability account for AMEX purchases $700
Debits current asset: "Amount Due from Co B" $300
Credits CC liability account for AMEX purchases $300
Debits CC liability account for AMEX purchases $1000
Credits Current asset "Amount Due from Co B" $300
Credits Cash/Bank account for AMEX payment $700
Company B:
Debits Expense or Assets for AMEX purchases $300*
Credits Current liability "Amount Due TO Co A" $300
Debits Current liability "Amount Due TO Co A" $300
Credits Cash/Bank for amount paid to A’s AMEX $300
This is for GAAP Accrual-Basis accounting, as I do for all.
Please note that the lines in blue are the ones that will remain on your books as the black ones will zero out.
* The accounts here would be based on what was purchased whether computer asset or travel expenses.
As emphasized earlier, these should be done using QB CC functions on Company A who has AMEX CC but would need to be JE's for Company B who does not have their own CC Liability account setup to be used.
I am just showing the debit and credit entries that should be the entries in QB General Ledger when done. Although I do totally agree with using system functions vs. JE's, I do not agree with hiding debits / credits.
In my opinion, anyone doing bookkeeping /accounting, and certainly anyone who is responsible for a set of books at a company needs to understand the basics of debits and credits. I teach this to all my clients.
I believe that anyone smart enough to own a business can easily learn these and should not trust anyone who does not know these to manage their accounting or bookkeeping. That would be just crazy to me. :)
I realize that I am likely greatly outnumbered on this opinion, but can only speak for what I have seen work and I don't believe in keeping accounting a secret so that my clients must keep me since they are clueless.
I would rather share all the clues there are so clients can learn and we can all move ahead to the next step. There is no shortage of QB clients going off the deep end daily and needing accounting assistance next. :)
