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Confusion in accounting entry
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
Replies (3)
for that RS. 2/- you have to recognise foreign exchange loss for $400. then pass the return entry for RS.24,800
creditor a/c dr 24000
profit& loss a/c (foreign exachage loss ) dr 800
to purchase a/c 24800
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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