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How does this appear on my General Journal?
10-23-2018, 10:34 AM
Post: #1
How does this appear on my General Journal?
Well, my business accept foreign currency. When it is converted a fee is added. Say I invoice my customer $75, Customer pays $76, Payment processor collect $1.50, I receive $74.50. How will this appear on my General Journal? Thank you very much! I really appreciate it.
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01-04-2019, 06:56 AM
Post: #2
RE: How does this appear on my General Journal?
Software like Simply and Quickbooks handle multiple currency. However, if you were doing this manually via General Journal, you can do this the following way:
Debit Bank $75
Debit Exch
Simply and Quickbooks can handle multiple currency. However, if you were doing this manually via General Journal, this is what you can do.
Debit Bank $74.50
Debit Exchange account $1.00 (set up a separate General ledger account for the exchange)
Credit Sales $75
Credit Foreign Exchange $1.00
Debit Bank charges 1.51
Credit Exchange account 0.01 ($1/$75 x 1.50) prorated exchange fee

In summary, your bank will have $74.50
Exchange balance on $74.50 is $0.99. Prorated exchange fee calculated at $1/$75 x $74.50
Sales + foreign exchange income = $75
Bank charges is $1.51 (converted to CAD)

However, the amounts are so small. A simple way would be:
Debit bank $74.50
Debit bank charges 0.50
Credit Sales or AR $75.00.

This is my humble opinion.
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