The company I work for has a few accounts in foreign currency. I understand how to post foreign exhange etc and have been doing so. However.... there is a dollar account which has money transferred over to a Dirham account how do you post this? A bank transfer ( journal entry) would not work or could it?????
What ever the currency is on the accountancy package you are using is what you have to post using but your cash book should have the equivalent in the converted amounts that is in your banks. So you have to the conversion done on the cash books and post the equivalent in sage or what ever package you are using.
Don't use Sage alas, but would think it should cope with this just fine.
We have multiple currency accounts and often transfer cash between these.
The transfer is done on accounts software and it uses the default exchange rates when posting, so amount creditted to the receiving account is invariably wrong, but all we then do is a simple journal to correct the amount received in the account and post the other side to Exchange Gain or Exchange Loss depending on whether its a negative or positive difference.
For example:
Transfer 10,000 Euros to Sterling Current Account and system has default rate of 1.2 Euro/£.
Software will convert transfer to: (CR) Euro Acct - 10,000 (DR) Current Acct 10,000/1.2 = £8,333.33
Now if ACTUAL exchange rate was higher than 1.2 - say 1.25, then Current Acct would in reality be creditted only 10,000/1.25 = £8,000
So we raise Journal to correct the Current Acct: (CR) Current Acct - £333.33 (DR) Exchange Loss - £333.33
On contrary if exchange rate was lower than 1.2 - say 1.1, then Current Acct would have in reality been creditted more at 10,000/1.1 = £9,090.91
So would raise Journal to correct the Current Acct: (CR) Exchange Gain - £757.58 (DR) Current Acct - £757.58
The jounals keep account balances correct and post losses/gains to Exchange variances, which our accountants seem happy with.
Sorry cannot help on Sage nominals for Exchange gain & Exchange loss, but assume same would appply.
Ridesy
-- Edited by Ridesy on Thursday 26th of April 2012 11:30:04 AM
I have done all the conversions. But maybe I am not understanding what you are saying ....But how do you post this on Sage. So $1000 goes to a Dirham account. A transfer wouldnt show this only a the dollar conversion rate
Hi Ridsey all our accounts are in sterling so the dollar account is converted to pounds. and variances posted to the exchange rate nominal code. The problem is trying to move that money from one bank to another as the transfer will transfer the dollar amount. I was thinking maybe to set up a nominal code and DR and CR the relevant accounts using the exchange rate.
