Journal Entry to square-off financial transaction

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Amit (Querist)
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15 March 2009 Is it possible to pass the Journal entry by squaring-off a/c receivable to a/c payable of the same party ?

Suppose if we make purchase and sale to same party situated outside India. My question is whether can pass the following entry.

A/c Payable .........Dr
To A/c Receivable

Does it violate any rules under FEMA ?

Thanks and Best Regards
Amit

Manmohan ACA, CS

Manmohan ACA, CS (Expert)
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15 March 2009 NO it does not violate any rule

Amit

Amit (Querist)
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16 March 2009 Dear Sir,

Thanks for the reply.
But what about the Exchange Fluctuation Gain / Loss if any ?

For example, we booked our a/c payable @ Rs. 45/- per US$. We booked our a/c receivable @ Rs. 48/- per US$.

If I want to sqaure-uP the payable agnst receivable, so what conversion rate should I apply, whether todays rate ie. Rs. 51.5/- per US$

Will it do, sir ?

Amit

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