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I've seen a few methods to do this and have got myself confused. Please would you help.

The company I have just started working for has loaned money to their subsidiary company. The loan is to be repaid with interest, (but no time frame has been given to my knowledge).

I thought of creating a dummy bank for the subsidiary company, to receive the loan and pay the capital, and then post the interest to a new nominal code for 'Loan Interest received'. I then noticed nominal code 1104 Inter company transfers and wondered whether that should be used. So at the moment I'm rather muddled.

Thank you.

The way I would do it...is to

pay BP the capital loan to a balance sheet nominal account 11xx

Then in the other company receive BR the loan from 11xx

There is nothing wrong in doing a bank account, it just adds more overhead to it.

Interest is just paid and received in the P&L

Any capital repayments are done against the 11xx account

Where you have multiple companies lending between each other... I set up an account for each company and have them the same in all the companies, than they should each add up to 0

Thank you for the swift reply.

I suppose what will decide whether I use a Bank account or the 11xx is if it is a regular occurrence or not. So I'll have to ask my client. If it's happening often and they need to keep track of each loan, then I'll have to do each one as a bank account separately.

Would you agree?

Yes