Example of entries on a settlement account and a bank account

In this example you transfer amounts from the bank of one holding (administration) to the bank of the other holding (administration). You transfer €1,000 from the bank book of administration 1 to the bank book of administration 2.

You can do this in two ways:

1. Use balancing entries without a settlement account entry.
2. Use a settlement account entry.

To use balancing entries without a settlement account entry (method 1):

When you process the bank statement of administration 1 that includes the transfer to administration 2, you post the following journal entry:

When you process the bank statement of administration 2 that includes the transfer from administration 1, you post the following journal entry:

The disadvantage of this entry is that the ledger account has a balance when you display an overview of the balancing entries ledger account per administration. The balance of the balancing entries account is evened out when you create an overview of the account that includes multiple administrations. Of course, you can open a separate ledger account for the transfers between the different accounts only.

The use of the balancing entries account is logical, because time passes between the processing of the bank statement in administration 1 and the processing of the bank statement in administration 2. Usually, this problem is resolved using the balancing entries account.

To use a settlement account entry (method 2):

When you process the bank statement of administration 1 that includes the transfer to administration 2, you post the following journal entry:

When you post the entry to the settlement account, the window for the other administration (in this example, administration 2) opens. The window that opens, generates an entry in the general journal of administration 2. In this entry you enter the following:

When you process the bank statement of administration 2 that includes the transfer from administration 1, you post the following journal entry:

This entry is also correct. You have now balanced out the balancing entries account in administration 2 and in administration 1 you have indicated what has happened as far as the transfer is concerned. In administration 1, you have to account for the transfer to another account. After all, the bank balance decreases, but against which account? This then is indeed the settlement account.