Accounting entry for exchange of foreign currency transaction

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 .

Please correct my export sales entry above
Correct entry will be

Overseas Debtor's A/c Dr
To Export sales A/c Cr
( Booking of export sales )

all other entries will be as it is .

Hi ,

we have some sales with foreign customer and receiving amount every month in foreign currency. while crediting the amount to our account bank is following some other rates than exchange rates of that day. how to treat those gain or loss from conversion rate and bank rate.

Thank you.

 

Dr. Instalment Amount (bank)

Dr. Receivables

Dr. FX loss

Cr. Igst

Cr. FX gain

Cr. Sales

this sales will be there only for first time. Later on reverse receivables

Other rates means ?. please clarify . 

Now a days customs are not using spot rates but they are using a different spot rates it seems I heard here only. @ Prasad please tell us that section if have idea about it

Hi team,

thanks for your quick response. let me give an example.

Sales booked on 04/03/2024- SGD 5000 @ 61.721

Remittance received to bank on 28/03/2024- SGD 5000 @ 61.796

Bank has credited the amount to me 302487.44 means @ 60.497

how to treat this loss from 60.497 and 61.796 either Exhange loss or bank charges?

 

 

Dr. Bank 

Dr. Fx loss (5k x first-last FX rates)

Cr. Receivables 

To account for foreign exchange transactions in Tally, follow these steps:

1. Enable Multi-Currency:
Go to F11: Features → Accounting Features.
Enable "Allow multi-currency".

2. Create Foreign Currency:
Go to Gateway of Tally → Accounts Info → Currencies → Create.
Enter the required details like currency name, symbol, standard rate, etc.

3. Create Ledger with Foreign Currency:
Create ledgers such as party accounts and select the relevant foreign currency in the "Currency of Ledger" field.

4. Pass Voucher Entry:
Use Sales, Purchase, or Journal Voucher types.
When entering the amount, Tally will prompt for the foreign currency value and applicable exchange rate.
Tally will then auto-convert to base currency.

5. Record Forex Gain/Loss (if needed):
To account for exchange rate differences, pass a journal voucher to record forex gain or loss, especially at the time of payment or at year-end closing.

If you are looking to simplify this process— you can use XLTool – Excel to Tally Import Tool. It helps automate forex voucher entries from Excel to Tally quickly and accurately.

Download Link at: https://xltool.in/excel-to-tally-import/