one of my client has purchased certain item from US for which he was billed $2500 on 06/12/2012
He made the payment of $2500/- through HDFC bank ltd on 15/12/2012 @ 55.83.
My question :
Entry for purchase should be passed by applying which rate and from where we will ge t the rate and whether payment entry should be passed @ 55.83 ?
Practically, companies take monthly average rates to account foreign transactions, But in case, you are using spot rate(i.e. date of transaction), then you may refer RBI rates at the following link:
https://www.rbi.org.in/scriptts/ReferenceRateArchive.aspx
Accounting entry will be as follows:
1) Purchase A/c Dr. 2500 X 54.47
To Vendor A/c 2500 X 54.47
2) Vendor A/c Dr. 2500 X 55.83
To Bank A/c 2500 X 55.83
3) Exchange Fluctuation A/c Dr. 2500 X(55.83-54.47)
To Vendor A/c 2500 X(55.83-54.47)
Alternatively Bank TT rates(both-buying & selling rates) can also be considered
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