How to handle the accounts of inter company loans
In the process of development and operation of the company, if there is any problem in fund operation, the company can choose to borrow from other enterprises. How to make accounts when borrowing business occurs between companies?
How to account for loans between companies?
How does company A handle accounting when it borrows from company B?
Answer: Company A can do the following accounting treatment when borrowing from Company B:
1. Company A:
Debit: bank deposit
Loan: short-term loan - Company B
2. Company B:
Debit: accounts receivable - Company A
Credit: bank deposit
Borrowings refer to the funds borrowed by enterprises from financial institutions such as banks and other units, including credit loans, mortgages and trust loans.
What does short-term borrowing and long-term borrowing mean?
Short term loans refer to all kinds of loans with a repayment period of less than one year that enterprises provide to banks or other financial institutions to wait for companies to receive in order to maintain the funds needed for normal production and operation or offset a debt. They mainly include operating revolving loans, temporary loans, settlement loans, bill discount loans, seller's credit, advance purchase deposit loans and special reserve loans.
Long term loans refer to the debts of an enterprise with a repayment period of one year or more than one operating cycle from financial institutions and other unit borrowers. The long-term loans of joint-stock enterprises in China are mainly long-term loans from financial institutions, such as loans from professional banks and commercial banks; In addition, it also includes loans from financial companies, investment companies and other financial enterprises.
Accounting treatment of loan interest
Take the accounting entry of short-term loan interest as an example:
When obtaining short-term loans:
Debit: bank deposit
Credit: short-term loan
Accrued interest at the end of the period:
Debit: financial expenses
Credit: interest payable
Repayment of short-term loan interest:
Debit: interest payable (return accrued interest)
Credit: bank deposit
Or:
Debit: financial expenses (interest is not accrued and paid directly)
Credit: bank deposit/cash on hand
Repayment of short-term loan principal:
Debit: short-term loan
Credit: bank deposit