QuickBooks Blog | Invoiced in foreign currency but received payment in base currency

 Software: Intuit QuickBooks 2014

Assuming your base currency is in Singapore dollar (SGD), when you create a sales invoice for your foreign currency customer (USD) for the amount of USD 1,000.00 with 7% rated GST (this customer is based in Singapore) at the exchange rate of 1.3000; the double entry for this transaction in Singapore dollar will be:

Debit Accounts Receivable – USD account: 1,391.00

Credit Sales account: 1,300.00

Credit GST Payable account: 91.00

GST is taxable on the income and exposes, hence, GST realised when invoice is created (accrual basis).

When customer made payment to you of USD 1,070.00 and you banked the amount into your Singapore dollar bank account at the exchange rate given by the bank of 1.2500; the double entry for this transaction will be:

Debit Bank – SGD: 1,337.50

Credit Accounts Receivable – USD: 1,391.00

Debit Exchange Gain/Loss account: 53.50

There is no different in the USD amount between the invoicing and receiving (USD 1,070.00), but due to exchange loss, the base currency (SGD) amount received is lesser than the invoiced amount (SGD 1,391.00 in invoice but SGD 1,337.50 in actual receive).

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