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Post Info TOPIC: PayPal and Exchange Rate Fluctuations


Newbie

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PayPal and Exchange Rate Fluctuations
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Hi,

I hope you can help me with the following (simplified) example of a problem that I'm facing. I'm self-employed, running a Canadian corporation dealing with sales in CAD and USD. I'm using Wave Accounting software.

Let's say I receive a payment of USD100, deposited into my PayPal account, which therefore shows a debit balance of USD100. Wave imports this and uses the exchange rate for that day (1.10000), recording a sale of CAD110 and a deposit of CAD110.

Three days later, I transfer the amount to my Canadian bank account, letting PayPal do the conversion for me. The PayPal account now balances in USD. However, the exchange rate has increased (to 1.15000), and Wave shows a credit to the PayPal account (again, imported and converted) of CAD115 and a corresponding debit on my bank account.

When I go through my PayPal transactions in Wave, it now shows a credit balance of CAD5. How do I handle this when I want to balance the account? I'm guessing I will need to somehow credit Realized Gain on Foreign Exchange, but what do I debitif I debit the PayPal account for CAD5, it would balance in CAD but, technically, not in USD...?

The above is simplified since I didn't include the PayPal fee, nor PayPal's conversion to CAD before transferring to my bank (PayPal credits the USD balance for the USD100, debits its CAD balance for CAD105, using its lower exchange rate of 1.05000, then transfers CAD105 to the bank).

Thank you,
Peter



__________________


Master Book-keeper

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Posts: 8646
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Wrong forum I'm afriad. We are UK based for starters. Plus we are a forum for professionals not for helping businesses. Hope you get sorted.

__________________

 Joanne 

Winner of Bookkeeper of the Year 2015, 2016 & 2017 

Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.

You should check out answers with reference to the legal position

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