Tag Archives: Accounts Receivable

Overpayment received in foreign currency

Software: MoneyWorks accounting system

You get an error of ‘Receipt amount exceeds amounts allocated to invoices’ when try applying an overpayment to a foreign currency invoice. You have to use dummy invoices to transit the additional amount received between the Overpayment Received and the Accounts Receivable account.

Assuming Singapore dollar is your base currency. You received a payment of US$10,960 from a customer for an invoice of US$10,690. This cause an overpayment of US$270 which you need to capture as an outstanding to the customer.

For illustration purpose, we create a current liability account and name it as ‘Overpayment Received’ (Check with your accountant for an appropriate name use).

To offset the full amount received, you create a dummy sales invoice of US$270 to the customer. This invoice debit USD Accounts Receivable and credit Overpayment Received account of US$270, which will add to the outstanding of US$10,690.

overpayment invoice

Then, record a receipt of US$10,960 into your USD bank account and offset both sales invoices. This receipt debits USD Bank US$10,960 and credit USD Accounts Receivable US$10,690 and US$270.

receipt

Next, record a dummy negative sales invoice (credit note) to reverse the US$270 from Overpayment Received account. This negative sales invoice debit Overpayment Received and credit USD Accounts Receivable.

credit note

You have an option to offset the credit note with the future sales invoice or send a refund to the customer. The ‘Send a refund to debtor’ feature is under the Command menu which debits the USD Accounts Receivable and credit USD Bank account.

send refund to debtor

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How to show transaction currency instead of functional currency in QuickBooks Ageing Report?

Functional currency, also known as Base Currency or Home Currency, is a reporting currency used in businesses. Transaction currency in another hand is a currency used in the transaction such as Invoices, Payment or Receipts, which could be a foreign currency.

You have to convert the transaction amount to the functional currency based on the exchange rate if the transaction is a foreign currency. Software which supports multiple currencies will do the conversion automatically once the exchange rate has set.

QuickBooks accounts receivable

By default, QuickBooks ageing report prints in functional currency. For example, you have an outstanding receivable of US$10,000 at an exchange rate of 1USD:1.3SGD, the receivable report prints S$13,000 instead of US$10,000. You have to customise the report if you want the ageing report show in transaction currency (USD) instead of functional currency (SGD). Select The Transaction Currency’ radio button from the Display tab of the Customise Report wizard allow the ageing report to print in transaction currency instead. You can also do a currency filtering from the filter tab of the Customise Report wizard to limit the number of currency show in the ageing report.

QuickBooks is a very user-friendly accounting system with tons of built-in features and reports cater to small businesses. Join our demo to understand more on how QuickBooks can help you manage your business finance better.

How to contra a receivable with the payable?

Software: MoneyWorks Desktop accounting software

You record the Back Charge into the MoneyWorks via Purchase Invoice when received the bill from the Client (your main-contractor). Back Charge is a project related expenses such as damages, work which has done on your behalf, etc. The purchase invoice which you recorded debits the Back Charge and credit the Accounts Payable account.

MoneyWorks does not allow you to contra the purchase invoice (accounts payable) directly with the outstanding sales invoice (accounts receivable), a ‘Clearing Account’ (a bank account type) is used to offset the two.

Clearing account

Then, use the payment feature in MoneyWorks to pay the purchase invoice with the clearing account and a receipt to receive the contra amount of the outstanding sales invoice into the clearing account. The payment debits the Accounts Payable and credits Clearing Account, whereas the receipt debits the Clearing Account and credits the Accounts Receivable. The Clearing Account should not have any balances as a result of contra between receivable and payable.