PSA L&P - Moving Money: How to move money from Bank Account A to Bank Account B (two options)

How to move money from Bank Account A to Bank Account B

You must choose from the following options. Follow the option which best matches your circumstances and needs.

 Option 1: If you need to deposit a physical check from Bank Account A into Bank Account B

  • Create a Bill with Bank Account B as the Vendor and using a Distribution Account* as the line item (You must choose which account from your COA to use as the Distribution Account).
  • Create the check using Bank Account A
  • After making the Deposit into Bank Account B, record the Deposit into Bank Account B, using a Distribution Account* to offset the deposit.
  • Each transaction will now show up in each Bank's Reconciliation

*Distribution Account: This may be a Dedicated Account, Net Asset Account, Transfer Account, or another Account your Accountant advises you to use. If using a Transfer Account, the same account would be used in both the Bill/Check and the Deposit. If using any other type of account, you would use different accounts in the Bill/Check than you would use in the Deposit. Please consult an accountant if you are uncertain which to use.

How this affects the Bank Reconciliation: The check written out of Bank A will show on the Bank Reconciliation for Bank A; the deposit made into Bank B will show on the Bank Reconciliation for Bank B.

Option 2: If you have transferred the money electronically

1. Create a Journal Entry
2. Credit Bank Account A for the Amount of the Transfer
3. Debit Bank Account B for the Amount of the Transfer
4. Each entry will now show up in each Bank's Reconciliation

Note: If the transfer includes a Dedicated Account, a Net Asset Account, or any other type of Account in addition to the Bank Accounts, you must have four entries. Two entries will be Bank Accounts as shown in Option 2 above. Two entries would be for non-asset accounts. Dedicated Accounts act like Income & Expense Accounts in one. Therefore, you would Credit the one Dedicated Account into which the money is going, and Debit the other Dedicated Account out of which the money is coming. Please verify this transaction with an accountant.

How this affects the Bank Reconciliation: Unlike a check, each side of a journal entry will affect the bank reconciliation for each bank account in the entry. In this case, the credit against Bank Account A will show as a Credit Journal Entry in Bank Account A's Bank Reconciliation and the debit against Bank Account B will show as a Debit Journal Entry in Bank Account B's Bank Reconciliation.

Have more questions? Submit a request

Comments

2 comments
  • Good point, Pamela. I have created a ticket so the support team will address your question. I also updated this article to encompass the answer.

  • I have completed the Journal entry as stated above, but unsure how to balance in reconciliation. See Receipt# 1231689

Please sign in to leave a comment.