Accounting Treatment of payment

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Ravi (Querist)
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13 February 2009 Please, Help me, We are dealing with Indian Co. he give me Payment in US Dollars. He send me US$ 12000 @ 49.54 and bank give us credit US$11995 @ 48.94 and bank not show US$ 5 dollar in our statement. How should we pass this entry in our Books.

Thanks

Ram Avtar Singh

Ram Avtar Singh (Expert)
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13 February 2009 bank a/s dr 11995
bank comm 244

comm recd or income recd cr 12239

Ravi

Ravi (Querist)
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13 February 2009 We book in Indian Currency then what's the treatment?

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Pankaj

Pankaj (Expert)
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15 February 2009 First, find out the base rate i.e., the rate of foreign exchange prevailing on the date of sale if the payment is received in same year or the rate as on 31st march of previous year, if the payment is recived in later years.

Compare the rate on date of payment received with the base rate. If rate received is more, it is your gain to be credited to foreign exchange fluctuation account. (opposite entry if it is less).

for ex. as per base rate you should get Rs.20 but because of fluctuation in rate you got 21 entry will be

bank dr. 21
to debtor 20
to Foreign Exchange fluctuation 1

now if bank deducts Rs.0.50 as commission, the entry will be

bank dr. 20.50
bank commission dr 0.50
to debtor 20
to Foreign Exchange Fluctuation 1

Ravi

Ravi (Querist)
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17 February 2009 He is an Indian Party and We are also billing in Indian Rupees and he give me payment in US Dollar then what's the treatment in Account books?