We are a Proprietorship concern. We are namely in the Import (Purchase) business and sale it locally. When we import the goods, we make the entry of the purchase and exchange rate of that day, while makiing the payment we use to change that entry on the rate given by the bank. for eg.: Import Purchase --> USD 62.15 (20/02/2014) and Payment made (Paid) ---> USD 60.25 (16/04/2014) is the entries do we post is correct in the books. If not then which entry has to posted for the same? Pls. reply on the above matter.
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Import purchase and payment
Replies (2)
as per your explanation it seems that you are doing correct entry, however you should transfer the gain/loss on purchase sale by opening Exchange Fluctuation A/c and net amount will reflect in P&L Account.
HI,
At time of booking foreign purchase, pls refer the exchange rate from Bill of Entry, while making payment pls refer the bank payment advice note
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