Creating Deposit for Bank Account Funding

Organizational structure consists of two companies, Company #1 and Company #2. Last year we switched bank accounts from Bank #1 to Bank #2 for our Checking and Health Reimbursement Accounts. Company #1 did not have any remaining checks for the old bank account (Bank #1), so AP invoices were processed to transfer the funds from Company #1 to Company #2. Company #2 then wrote a check (Bank #1) to Company #1 to return the funds, which were deposited directly into the HRA Account with Bank #2. However, instead of recording the deposit in Cash Management, the HRA Account with Bank#2 was created with a starting balance of the deposit amount and a GL Entry was done debiting the HRA Account (Bank #2) and crediting an intercompany receivable account for Company #1 so the GL matched CM. The issue is the GL entry needs to be reversed to clear the credit that was entered in error, and a deposit entered in Cash Management for the HRA account (Bank #2), but I do not have a credit account to offset with the debit for the deposit to the HRA account in cash management. Do I need to create an open receivable in AR for the deposit amount, and then  enter the deposit in CM and debit the HRA account and credit Accounts Receivable, satisfying the newly created open receivable?

  • 0

    If Bank #2 was created with a starting balance of the deposit amount and then a journal entry debited Bank #2, I would think Bank #2 balance was double and is wrong in general ledger.  How was the amount for the Intercompany Receivable Account recorded when you started Bank #2 with a balance and before the journal entry?   It seems that one error was starting Bank #2 account with a balance.

    The thing to keep in mind is that General Ledger does not talk back to other applications.  So the journal entry would not affect CM although it would affect the balance of Bank #2 in only the general ledger. 

    The other thing to keep in mind is that CM only talks to GL, not to AR.  So if you were to create an open receivable in AR and then enter a deposit in CM, you will leave AR with an open receivable balance, although the deposit would post to GL.  

    A better scenario for Company #1 would have been to create Bank #2 with a zero balance. Pay Company 2 the money they needed to pay your AP invoices and record that from Bank #1 as the intercompany receivable (DR intercompany receivable & CR Bank #1).  Then deposit the money into bank #2 and credit the intercompany receivable either through CM or through AR using an AR Misc GL account deposit which with DR Bank #2.  

    There are ways to straighten it out, but it might be best to get a consultant's or Sage's help since the steps are a little complicated and depend upon how you go about fixing it.