As-11

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Hi 



please tell me accounting treatment for this following events







Event 1-A Co. acquires acquires foreign currency ( say USD) in exchange for RS. ( say 1000 $ @ Rs. 50 per $ )



Event 2-Now they release this FC to one of their marketing officer for his foreign tour under imprest system. Say Co released 1000 $.



Event 3-One month later after touring the traveller surrendered 100$ and expense sheet for 900$.



Event 4 - Co. Exchanges 100 $ for Rs 48 .



Please write a/c entries for all 4 events !



thanks

Replies (4)

A) FC on Hand A/c Dr             50,000

            To Cash / Bank                           50,000

(Being FC purchased - $1000 at Rs.50/$)

B) Tour Advance A/c Dr         50,000

           To FC on Hand                             50,000

(Being Tour advance given to Mr.X)

Alternatively you can givea I Owe You voucher, but it is a better Internal Control System to pass this entry.

C) Now, this expenditure of 900$ should be accounted at the rate prevailing on the date of transactions, but, you can use an approximate rate. As there is no info in your question, we can ignore that rate and account the expenses in proportionate way - i.e. (50000 X 900$) / 1000$, hence, 45000

Tour Expenses A/c         Dr                  45,000

FC on Hand A/c                Dr                   5,000

      To Tour Advance                                                50,0000

D) Exchage of FC

Cash / Bank A/c Dr (100$ X 48)          4,800

Forex Loss                                                 200

       To FC on Hand                                                     5,000

 

Shiva

 

ya shiva is absolutely correct .

 But in some organisations they take an average conversion rate for the whole month , you can debit the expense using that conversion rate  which is allowed as per AS 11 .

at closure of accounts whether monthly, quartely , half yearly or annually this FC should be reinstated at balance sheet date . Profit / loss should be accounted for

Yes, the P&L items, especially incomes-expenses are accounted on average rate..

 

Rest all entries are correct...

yaa agree with above entry by shiva


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