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foreign Currency A/c treatment

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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2 Replies

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

FC in Hand A/c Dr 50,000

To Cash / Bank 50,000

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

B) X's Advance A/c Dr 50,000

To FC on Hand 50,000

(Being Tour advance given to Mr.Xand to kept in debtors list )

C) Tour Expenses A/c Dr 45,000(900$* exchange rate at date of transaction or monthly average rate )

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( Drebited in P/l a/c )

To FC on Hand 5,000

At account closure balancxe in FC a/c should be reinstated at rate existing on balance sheet .

And profit and loss on it is accounted for in P/l a/c

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CA Jayesh Gokalgandhi (CA in Industry) (126 Points)
Replied 21 December 2009

Anshika has very rightly noted down the entires..

I would just like to add that In case the accounts are closed before settlement of advance (ie. there is balance in travel advance account and not FC a/c) then the balance in advance account will have to be re-stated at the rate as of balance sheet date.