This is our old Accountancy Forum which is now closed and is only available for reference purposes.
Visit the NEW ACCOUNTANCY FORUM at which is open for registration and discussions.

Accountancy Forum Forum Links » Home | Profile | Active Topics | Members | Search | FAQ
Save Password
Forgot your Password?

 All Forums
 The Profession
 Accounting and Audit
 Currency conversion - Journal Entry
 New Topic  Topic Locked
 Printer Friendly
Author Previous Topic Topic Next Topic  

Unregistered Trainee

13 Posts

Posted - Mar 03 2009 :  1:51:58 PM  Show Profile
Dear all,

If a company has USD and Rupee bank accounts and it transfer USD 1000 from its USD account to its own Rupees account. What journal entry is to be passed.




1109 Posts

Posted - Mar 04 2009 :  4:33:13 PM  Show Profile  Send awaisaftab a Yahoo! Message
Just keep a dummy or contra account cash/asset accout in your ledger to transfer the difference in the dollar's rate and to show it in ballance sheet. Because you cannot show the ballance of dollars in balance sheet in terms of dollars. It must be transfered in terms of rupees for the purpose of financial reporting.
If you transfer $ 1000/- in rupee account and dollar rate is Rs 81/-

Rupee A/C ========= Dr.81,000/-
Dollars A/C========= Cr. $1000
Dummy or Contra A/c==== Cr. Rs 80,000/-

If any Bank Charges Deducted on conversion or transfer then following entry shall be passed.

Rupee A/C ========= Dr
Expense A/c=========Dr.
Dollars A/C========= Cr.
Dummy or Contra A/c==== Cr.
Go to Top of Page

Unregistered Trainee

United Arab Emirates
48 Posts

Posted - Mar 05 2009 :  2:39:28 PM  Show Profile

Now-a-days some companies are using Multiple currencies in ERP based accounting system, where transactions level forex rate are fixed as a base rate or flexible field as per requirment and at balance sheet currency differences are charges to Unrealized Forex Gain/(Loss).

For Example your company has purchased raw material with cost of 1,0000 US$ on Credit(LC) that time rate was 1US$=79PKR.

Transaction Level Difference

Dr.=========Materials/Inventory/Purchase------->1000x79 79,000
Cr.============Supplier/AP/Creditor-----------------------> 79,000

While making payment rate is 1US$=80PKR.

Dr.=========Supplier/AP/Creditor-------> 79,000
Dr.=========Realized Forex Loss---------> 1,000
Cr.============Bank Account-----------------------> 80,000

Balance Sheet Level Difference

Maitaining Foreign current account Like Dollar a/c

Suppose in your books one dollars showing balance of 195,000PKR.(US$ 2,500)

as of balance sheet date= 01US$=80PKR
For forex adjustment we have to pass following entry.

Dr.===========Bank Account account (80-78)x 2,500---------> 5,000
Cr.==============Unrealized forex Gain-----------------------> 5,000

In your case as per my understanding

Dr.=========PKR account------->1000x80 80,000
Cr.============US$ Account------------------>1000x80 80,000

and at the end or balance sheet date you will book Unrealized forex gain or loss for this dollar account.

I hope you will get some idea from above intances.


Go to Top of Page
  Previous Topic Topic Next Topic  

Follow Accountancy on TwitterFollow Accountancy on Facebook

 New Topic  Topic Locked
 Printer Friendly
Jump To:
Accountancy Forum © 2002 - 2010 Accountancy Go To Top Of Page
This page was generated in 0.05 seconds. Snitz Forums 2000