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
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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 balancebalance, we will add a debit journal to clear it out into the Gains GL Account
Click here to add a new journal