Moving Invoice due to capital Introduced

1

Hi There
I would like to know if it is possible in Manager to move the outstanding Invoice to Capital introduced Account.
Let me give you the scenario
I’m working for the company “A” as a contractor employed by another company Company “B” and the Company “A” did not pay Company “B” for sometime so there are outstanding Invoices towards Company “B”. Now with the agreement in place I need to shift the Outstanding payments to Capital Introduced by Company “B”, since the Shares of company “A” being sold to company “B” for the outstanding Amounts. Please tell me if that’s possible and how to approach it in Manager

2

You need to clarify the scenario. What you have said amounts to this:

  • You work for A
  • A works for B
  • For some unknown reason B expected payment from A, despite the fact A worked for B
  • A did not pay B
  • Now B will own part of A because A did not pay B for the work A did for B

None of that makes sense. It is about three times backwards.

3

Assuming that A engaged B to do some contract work.
B invoiced A, but A hasn’t paid the invoice.
Now B is going to take shares in A instead of being paid

In A you would do a Journal
Debit - Accounts Payable + B + Invoice
Credit - Owners Equity + Issued Shares

In B you would a Journal
Debit - Investment in A (BS Asset account)
Credit - Accounts Receivable + A + Invoice

4

Hi Tut
I think I have placed something wrong the scenario is
I Own B
B worked for A
I Worked through B for A
For my work A suppose to pay B and B would pay me
Now A did not have sufficient funds and B (I) have been offered share in A for the part of the money owned.
I hope this clarify the situation

5

Hi @Brucanna
You got that perfectly but please slow a little because this is a Chinese to me so far
Could you repeat this step by step please

6

Since @Brucanna was on the right path, I will let him explain his procedure more completely. Your explanation made things clear to me.

7

Thanks @Tut

8

As you own B, lets just talk from your position.
In this example I am assuming that B will be the owner of the shares in A.

When you issued the Sales Invoice to A, in B’s books the accounting entry would have been:
Debit - Accounts Receivable + Customer A account
Credit - Income (sales) account

“If” A had paid the invoice - then in B’s books the accounting entry would have been
Debit - Bank account
Credit - Accounts Receivable + Customer account

Then the balance in the Accounts Receivable + Customer A account would have been cancelled out, but as they haven’t paid, a balance remains in the Accounts Receivable +Customer A account.

Now an alternate (non cash) payment has been offered by A in the form of shares.
Owning shares in another company is known as an investment (asset).

Therefore to get the balance from the Accounts Receivable + Customer A account to the Investment account you need to process a Journal. (Journals are for transactions that don’t involve cash)

So you would create under Settings - Chart 0f Accounts a BS Asset account called “A Shares”

Then the Journal would be:
Debit - A Shares
Credit - Accounts Receivable + Customer + Invoice Number.

9

Thanks @Brucanna I appreciate your help