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Exchange Fluctuation in Export Sale

Naveen Chand Khulve (CA) (1521 Points)

01 March 2009

Export Sale shown in Trial Balance=100000

Sundry Debtors(only for Export Sale)=90000

Exchange Fluctuation=10000

Is this is Showing true picture?

My question is that why foreign exchange fluctuation is shown in Export Sale?

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8 Replies

(Guest)

Take an Example to clarify your query...

Suppose Invoice amount is 2,000$.

Now if Exchange rate at the time of sale is Rs.50=1 US $.

Entry will be

Debtors Dr. 100,000

To Export Sales 100,000

Now, suppose at the time of closing accounts rupee appreciate and spot rate came to Rs. 45=Us $1.

Now, as per AS-11, we will reinstate foreign Debtors at this prevailing rate.

Entry Would be

Difference in Exchange Dr. 10,000(2000$*5)

To Debtors 10,000

Hence Rs. 10,000 will be shown as an expense in Trial.

Now, I believe that above Example has answered your query.

Regds

Vipul garg

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Naveen Chand Khulve (CA) (1521 Points)
Replied 03 March 2009

Originally posted by :Naveen Chand Khulve

Export Sale shown in Trial Balance=100000
Sundry Debtors(only for Export Sale)=90000
Exchange Fluctuation=10000
Is this is Showing true picture?
My question is that why foreign exchange fluctuation is shown in Export Sale?

But amount was received in advance?

(Guest)

Continuing with above example....

If amount was recieved in advance when exchange rate stood at 1US$=Rs. 45...

Entry would be

Bank a/c Dr. 90,000

To Advance from customer 90,000

If at the time of sale Exchange rate is 1US$=Rs.50

Sale entry will be

Debtor dr. 100,000

To Export Sales 100,000

Adjustment Entry would be

Advance from Customer dr. 90,000

Difference in Exchange dr. 10,000

To Debtor 100,000

~Vipul Garg~

Pratik K (Student) (3406 Points)
Replied 08 March 2009

thanks for entry

1 Like

somashekara (accountant) (23 Points)
Replied 08 October 2009

hi friends

please can any one clarify my doubt

we have booked a forword contract for usd 1,00,000 at the rate of Rs.50 per 1 usd and contract period is one month and we have negotiated a export document at forword contract rate for usd 1,00,000

at what rate sales would be accounted in our books

and also explain me what is forword contract rate and spot rate,

1 Like

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Krishna Sarathi Pati, ACMA (PVT JOB) (93 Points)
Replied 21 May 2015

Hi freinds,

Can you tell me that as per AS-11, whether any export Customer Advance has to be re-instated periodically and any exchange gain/loss is to be calculated at the quarter end/year end.

Or the exchange gain/loss is to be calculated at the time of adjustment of customer outstanding, it may be happend after the 01 year/06 month from the receipt of such foreign advance.

Regards,

Krishna

MOB-7504492639

V P Narasimhan (Accounts Manager) (793 Points)
Replied 15 September 2015

I think we can opt an a/c head as Exchange Gain/Loss wherein we can a/c all + or - in the same a/c. If I am correct.

Suraj S.G Synthetics (2 Points)
Replied 03 October 2018

i have received the advance on 27th march 18 and bill made in next financial year i.e. 13th april 2018 so what will be the closing entry as on 31.03.2018 ?

Please help