Intercompany Reconciliation Journal Entries Examples
Intercompany transactions occur when one unit of a company engages in transactions with another unit within the same company. These transactions need to be reconciled and eliminated during the consolidation process to prevent double counting. Below are some examples of intercompany reconciliation journal entries.
Scenario 1: Intercompany Sale of Goods
Company A sells goods worth ₹50,000 to Company B.
1. Recording the Sale by Company A
| Date | Particulars | Debit (₹) | Credit (₹) |
|---|
| 2024-06-01 | Intercompany Receivable A/c | 50,000 | |
| | To Sales Revenue A/c | | 50,000 |
| | (Being goods sold to Company B) | | |
2. Recording the Purchase by Company B
| Date | Particulars | Debit (₹) | Credit (₹) |
|---|
| 2024-06-01 | Inventory A/c | 50,000 | |
| | To Intercompany Payable A/c | | 50,000 |
| | (Being goods purchased from Company A) | | |
Scenario 2: Intercompany Loan
Company A provides a loan of ₹100,000 to Company B.
1. Recording the Loan by Company A
| Date | Particulars | Debit (₹) | Credit (₹) |
|---|
| 2024-06-01 | Intercompany Receivable A/c | 100,000 | |
| | To Cash/Bank A/c | | 100,000 |
| | (Being loan provided to Company B) | | |
2. Recording the Loan by Company B
| Date | Particulars | Debit (₹) | Credit (₹) |
|---|
| 2024-06-01 | Cash/Bank A/c | 100,000 | |
| | To Intercompany Payable A/c | | 100,000 |
| | (Being loan received from Company A) | | |
Scenario 3: Intercompany Expense Allocation
Company A incurs an expense of ₹20,000 and allocates it to Company B.
1. Recording the Expense by Company A
| Date | Particulars | Debit (₹) | Credit (₹) |
|---|
| 2024-06-01 | Intercompany Receivable A/c | 20,000 | |
| | To Expense A/c | | 20,000 |
| | (Being expense allocated to Company B) | | |
2. Recording the Expense by Company B
| Date | Particulars | Debit (₹) | Credit (₹) |
|---|
| 2024-06-01 | Expense A/c | 20,000 | |
| | To Intercompany Payable A/c | | 20,000 |
| | (Being expense allocation from Company A) | | |
Elimination Entries for Consolidation
1. Eliminating Intercompany Sales
| Date | Particulars | Debit (₹) | Credit (₹) |
|---|
| 2024-06-30 | Sales Revenue A/c | 50,000 | |
| | To Inventory A/c | | 50,000 |
| | (Being elimination of intercompany sales) | | |
2. Eliminating Intercompany Loan
| Date | Particulars | Debit (₹) | Credit (₹) |
|---|
| 2024-06-30 | Intercompany Payable A/c | 100,000 | |
| | To Intercompany Receivable A/c | | 100,000 |
| | (Being elimination of intercompany loan) | | |
3. Eliminating Intercompany Expense Allocation
| Date | Particulars | Debit (₹) | Credit (₹) |
|---|
| 2024-06-30 | Expense A/c | 20,000 | |
| | To Intercompany Receivable A/c | | 20,000 |
| | (Being elimination of intercompany expense allocation) | | |
