Book keeping for accounts in different currency

Hi All experts, 

 

I have a quick question regarding some accounts entries for transactions involved in 2 different currencies (INR and US$). Please analyse the following case and let us know your comments :

 

A pvt ltd company has an account with say an Indian bank with currency INR and a US bank (or Paypal) with currency US$.

 

company raised an Invoice of 540$ on say 1st Nov,2013 for a client based in US. client pays the invoice completely in US$ on 15th Nov to our US-BANK account.  On same day i.e. 15th Nov, our US bank deduct 40$ as fees for that transaction. 

 

On 20th Nov, US bank converts the remaning 500$ to INR and transfer the same to our Indian bank account on same day.

 

Accounting experts, please help us in recordin these transactions along with foreign exchange gain/loss in our account books. 

 

Thanks,
Divya

Replies (1)

1- For rising the invoice to Foreign party (Client)......

Foreign Party  A/c    Dr   XXXX

     To (Income Head)              XXXX

 

2- For depositing the Due amount to Our Foreign BAnk

Foreign Bank  A/c    Dr   XXXX

    To  Foreign Pary A/c          XXXX

 

3- Bank Charge for collection by Foreign bank

Bank Charge/Commission A/c    Dr   XXX

     To Foreign Bank A/c                         XXX

 

4- For the Tranfering of amount to domestic bank from foreign bank

Domestic Bank A/c  Dr   XXXX (Current day RBI  Exchange rate)

     To Foreign Bank A/c         XXXX

 

5- For forex gain or loss  ( Please refer the bill raising day RBI exchange rate)

a)- If gain is there

Foreign Party A/c  Dr                 XXXX

    To Forex Gain/Loss (provision)        XXXX

 

b)- if loss is there

Forex Gain/Loss (provision)   Dr  XXXX

     To  Foreign Party A/c                   XXXX

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