Invoices in $ but payment in inr

The sale should be recorded at the exchange rate on the date when the Invoice was being raised to the customer. 

Regarding the receipt of the payment, whether it's through Paypal or direct credit, the rate of eschange would be the amount credited to your bank account divided by the quantity mentioned in the invoice. any difference in the eschange rate shall be routed through the P&L account by debitng if there is a loss & crediting if there is a gain.

As you said that teh client first transfers the amount to your company paypal & then Auto transfers it to your bank A/c.  Does the Paypal transfers the amount by applying the exchange rate on the day when the client makes the payment to your co paypal A/c and not at the exchange rate when paypal auto transfers it to your co A/c.

please refer AS 11 for this

Exchange rate applicable is the rate on the day paypal transfers to our physical bank account and not of the day client transfer to our paypal account.

Also, sometimes client transfer few extra $s than the $s in invoice to account for the paypal fees etc. So, if invoice is of 200$, client may transfer 220$ ... and then in our actual account we may get 208$ for that invoice ... (assuming 12$ paypal fees) . In this case, we are showing 208$ (with corresponding INR) in our books of accounts. We aren't showing any paypal fees etc. Is this okay ?

Also, how can we adjust the extra 8$ we got in that invoice ? We don't want to adjust it with any other invoice ....etc.

Also, sometimes we get the money directly in our bank account in INR from our clients. As you said, we can just divide (INR/)(total $ in invoice) and can apply that exchange rate but what if client transferred the money with few more $s and not exactly the number of $s mentioned in the invoice.

please help.

Thanks,
Divya

I dont think that the accounting of the receipt from client shud be on the basis at the rate when paypal transfers the money to the co account. but it shud be at the rate when client trasnfers the money to teh paypal account as the clinet would also be recording the paymetn in their books at the rate when it makes teh payment.

Regarding the extra pymt that the client makes, you can show it as other income and then debit the P&L with the paypal charges.

How we receive amount it doesn’t matter I mean through paypal or directly into Indian A/c directly,

On the prime facie you will not receive inward remittance more than the invoice amount (you already raised), but if even you receive the inward remittance more than the Invoice amount you have to Tranfer the the loss or gain to foreign exhnage flucation a/c.

Usaully when you receive Inward remittance more than the invoice amount you have the following the options (considering your case)

·         Raise debit note for the balance amount.

·         Revise the original invoice.

·         Adjust against other or next invoices.

·         Tranfer the balance to Foreign Exchange fluctuations A/C.

Following are the situations when you can transfer the balance to Foreign Exchange fluctuations A/C, as you said you cannot adjust against other Invoices.

If we raise an invoice for $100 on 01/09/2012 and ex-rate on 01/09/2012 is Rs55.00/usd. Then in your books entry will be as follows,

On 01/09/2012,        Party A/c …dr          5500

                                To Income A/c                5500

                             ($100*55)

Let’s assume you receive amount to your Indian A/C (not paypal A/C) on 21/09/12 and ex-rate = 56, with different scenarios as follows,

1)    Party paid $105, bank charges $5.00, net amount received (to our Indian A/c) = $100*56=5600

Entry: -         Bank A/c … Dr                               5500

                       To Party A/c                                      5500

                       To Foreign Exchange fluctuation A/c      100

2)    Party paid $110, bank charges $5.00, net amount received to your Indian A/C (not to paypal A/C) = $105*56 = 5880

Entry:-                   Bank A/c … Dr                               5580

                       To Party A/c                                      5500

                       To Foreign Exchange fluctuation A/c      380

Regarding the extra pymt that the client makes, you can show it as other income and then debit the P&L with the paypal charges.

Read more at: /forum/details.asp?mod_id=221174&offset=1#.UFwcUY3iZIY

Dear Mr.Giridhar,

How can we show it as other income... and what basis we have to reflect to the P&L a/c.

I dont think that the accounting of the receipt from client shud be on the basis at the rate when paypal transfers the money to the co account. but it shud be at the rate when client trasnfers the money to teh paypal account as the clinet would also be recording the paymetn in their books at the rate when it makes teh payment.

Read more at: /forum/details.asp?mod_id=221174&offset=1#.UFwcUY3iZIY

Let us assume if client transfers the money to Paypal at Rs.55/$ and Paypal transfers the money to our  Indian INR A/C at Rs.54/$, then as you said if we book the above at 55/$ and actually we received at 54/$ how to make it feasible as you bank balance shows 54/$ and you book balance shows 55/$... lets think on this I believe...