How would you set up a procedure that would pay an employee (1099) from ABC company's depleted payroll checking account with a manual check from XYZ company payroll account? What journal entries would be generated. The employee would still get a 1099 from ABC company at year end.
"cld" wrote
As long as both companies agree...............
"XYZ" would record a loan receivable from "ABC" in the amount of the check.
"ABC" would record a loan payable in the amount of the payment, and debit an expense (you use "employee" and "(1099)" like they are interchangeable).
I see nothing but problems down the road if these types of transactions continue.
Company A could help Company B out, but these usually do not work quire as planned. A has future cash flow problems Company B will be left with an uncollectible receivable. Why are you keeping money in the payroll account anyway??
Lance Mertz, CPA Ketchikan, Alaska
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