it assessee exchange of foreign currency transaction
question:
how to accounting entry passed procedure in books.
In case Import purchase
1) Import purchase A/c Dr
To Overseas Creditors A/c Cr
( Booking of Import purchase )
2) payment entry
Overseas Creditors A/c Dr
Exchange Loss A/c Dr
To Bank A/c Cr
( exchange Loss due to rate difference )
3) Loss transfer to profit and losss account
Profit and losss. A/c Dr
To Exchange Losss A/c Cr
( Loss transfer to profit and loss account)
Note - in case Exchange gain due to rate difference Exchange Gain Account will be credited and transfer to P&L account .
In case of sales
1) Export sales A/c Dr
To Overseas Debtors A/c Cr
( Booking of export sales )
2) payment received of sales
Bank A/c Dr
To Exchange Gain A/c Cr
To Overseas Debtors A/c Cr
( Exchange gain due rate difference )
3) Gain transfer to profit and loss account
Exchange gain A/c Dr
Profit and loss account A/c Cr
( transfer to profit and loss account)
Note- In case of loss due to rate difference at time of sales Exchange loss account will be debited .
In short when Gain due exchange rate difference Exchange Gain Account will be credited , In case of loss due to rate difference Exchange loss account will be debited .
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