Transaction Procedure - Gains/Losses

Debtors/ Customer Module> Activity> Debtors/ Customer Transactions 

Things to note about the Journal entries for foreign debtors

• The journal entry in the foreign currency – creates a dual entry in that currency and in Rand
• Ensure you are using the correct exchange rate
• Ideally, capture gains and losses immediately after capturing the payment

Scenario 1

We sold goods to an American US-dollar company

When the initial sale was made the amount of the invoice was R2800 at an exchange rate of 14 = 200 dollars

When the invoice is paid

The exchange rate was 14.5 which is still 200 dollars but at R2900

The difference will need to be journalized in the debtor’s transactions

From these entries, we can note that the dollar amount will clear

However, there will be a gain in the rand account whereby an extra hundred rand is gained due to the differing exchange rate at the time of the transaction

Since this is a credit balance, we will add a debit journal to clear it out into the Gains GL Account

Click here to add a new journal