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As-11

Rider ride (CA Final) (180 Points)

20 December 2009

Hi

please tell me accounting treatment for this following events

Event 1-A Co. acquires acquires foreign currency ( say USD) in exchange for RS. ( say 1000 $ @ Rs. 50 per $ )

Event 2-Now they release this FC to one of their marketing officer for his foreign tour under imprest system. Say Co released 1000 $.

Event 3-One month later after touring the traveller surrendered 100$ and expense sheet for 900$.

Event 4 - Co. Exchanges 100 $ for Rs 48 .

Please write a/c entries for all 4 events !

thanks

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4 Replies

Shiva Kumar (CA Final) (208 Points)
Replied 20 December 2009

A) FC on Hand A/c Dr 50,000

To Cash / Bank 50,000

(Being FC purchased - $1000 at Rs.50/$)

B) Tour Advance A/c Dr 50,000

To FC on Hand 50,000

(Being Tour advance given to Mr.X)

Alternatively you can givea I Owe You voucher, but it is a better Internal Control System to pass this entry.

C) Now, this expenditure of 900$ should be accounted at the rate prevailing on the date of transactions, but, you can use an approximate rate. As there is no info in your question, we can ignore that rate and account the expenses in proportionate way - i.e. (50000 X 900$) / 1000$, hence, 45000

Tour Expenses A/c Dr 45,000

FC on Hand A/c Dr 5,000

To Tour Advance 50,0000

D) Exchage of FC

Cash / Bank A/c Dr (100$ X 48) 4,800

Forex Loss 200

To FC on Hand 5,000

Shiva

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Anshika ( CA -Industry- Sr.Accounts Officier) (141 Points)
Replied 21 December 2009

ya shiva is absolutely correct .

But in some organisations they take an average conversion rate for the whole month , you can debit the expense using that conversion rate which is allowed as per AS 11 .

at closure of accounts whether monthly, quartely , half yearly or annually this FC should be reinstated at balance sheet date . Profit / loss should be accounted for