Journal Entry on Foreign currency payment
This query is : Resolved
13 February 2026
I paid 80,000 Euro at exchange rate of Euro to INR 107.59 total INR debit from bank was 8607200 and USD to INR exchange rate is INR90.72, now accounting/reporting currency is USD. please prepare the journal entries how to pass in my books of account in USD
14 February 2026
1. If Payment is for Expense
Dr Expense / Asset A/c USD 94,880.99
Cr Bank A/c (USD) USD 94,880.99
2. If Payment is Against Existing Payable
Example:
Suppose payable recorded earlier at USD 92,000
Now payment made USD 94,880.99
Difference = 2,880.99 (Forex Loss)
Entry:
Dr Accounts Payable USD 92,000
Dr Forex Loss USD 2,880.99
Cr Bank USD 94,880.99
Since reporting currency is USD:
All transactions must be translated at spot rate on transaction date.
Bank (INR) must be translated to USD equivalent.
Any exchange difference goes to P&L.
If Bank Account is Maintained in INR Ledger
Then in books:
You will maintain:
INR Bank (in USD books)
Record USD equivalent.
At period end, revalue INR bank balance at closing USD/INR rate and recognise forex gain/loss.
Final Journal Entry (Standard Case)
If fresh payment and no prior payable:
Dr Expense / Asset A/c 94,880.99 USD
Cr Bank A/c 94,880.99 USD
(Being 80,000 EUR paid, converted via INR to USD at applicable rates)
Dr Expense / Asset A/c USD 94,880.99
Cr Bank A/c (USD) USD 94,880.99
2. If Payment is Against Existing Payable
Example:
Suppose payable recorded earlier at USD 92,000
Now payment made USD 94,880.99
Difference = 2,880.99 (Forex Loss)
Entry:
Dr Accounts Payable USD 92,000
Dr Forex Loss USD 2,880.99
Cr Bank USD 94,880.99
Since reporting currency is USD:
All transactions must be translated at spot rate on transaction date.
Bank (INR) must be translated to USD equivalent.
Any exchange difference goes to P&L.
If Bank Account is Maintained in INR Ledger
Then in books:
You will maintain:
INR Bank (in USD books)
Record USD equivalent.
At period end, revalue INR bank balance at closing USD/INR rate and recognise forex gain/loss.
Final Journal Entry (Standard Case)
If fresh payment and no prior payable:
Dr Expense / Asset A/c 94,880.99 USD
Cr Bank A/c 94,880.99 USD
(Being 80,000 EUR paid, converted via INR to USD at applicable rates)
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