Client Requirement – They have Intercompany Payable and receivable accounts. They need to create Journal Entries with these IC accounts to track the amount flow from one subsidiary to another. But they do not have any transactions associated with these. That is actually the money not flowing from one subsidiary to another. So they want to create JE with just IC accounts.
Solution – Client using advanced intercompany journals. In the Intercompany Journal entries, there should be 4 lines. So we can use an Intercompany Clearing account to offset the amount from one subsidiary to another. This account will be of Other current Asset types.
an intercompany clearing account will be automatically created if the Time and Expense feature is enabled in the account and when the first intercompany transaction occurs.