Confusion in accounting entry


Dhrunil Bhatt (Chartered Accountant)     17 June 2019

Dhrunil Bhatt
Chartered Accountant 
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Dear Experts, Please refer the below sample transaction in which I have a confusion with regards to the exchange rate with which the accounting entry shall be posted in the books of accounts of the purchaser of the goods. Suppose on 01-04-2019, I imported some goods for $1000 when the conversion rate was 60 Rs./$. So I would book an accounting entry for Rs. 60,000 on 01-04-2019 by debiting Purchase A/c and crediting Supplier A/c. Now, on 15-04-2019, the goods worth $400 was returned for which the supplier sent the debit note. The exchange rate on 15-04-2019 was 62 Rs./$. The question is that on 15-04-2019, at what rate the debit note would be accounting. Whether, it would be accounted at Rs. 24,800 (i.e. 400 X 62) or at Rs. 24,000 (i.e. 400 X 60) As per my view, it should be accounted for at Rs. 24,800 Request you to provide your comments on this case. Thanks and Regards, Dhrunil Bhatt

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satish (teaching)     21 June 2019

satish
teaching 
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for that RS. 2/- you have to recognise foreign exchange loss for $400. then pass the return entry for RS.24,800

lakshmi (financial controller)     06 July 2019

lakshmi
financial controller 
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creditor  a/c    dr                                                 24000       

profit& loss a/c  (foreign exachage loss )   dr     800

            to purchase a/c                                   24800

 

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Kumar Sushank (Asst. Manager - Accounts & Taxation)     05 October 2019

Kumar Sushank
Asst. Manager - Accounts & Taxation 
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Entry should be as :

Creditor A/C ..................... Dr. 24,800/-

To Purchase A/C .............. Cr. 24,000/-

To Exchange Variation ...... Cr. 800/-

(In that case, It should be as profit because returning goods on higher rate.)


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