Tag Archives: QuickBooks home currency adjustment

Differences between the actual amount received and the amount recorded in QuickBooks accounting software

Software: Intuit QuickBooks 2015 accounting software

Due to the differences in exchange rate, the amount received in the home currency bank, which has transferred from a foreign currency bank account, could be different from the amount recorded in the QuickBooks accounting software.

Assuming you transferred USD15,000 from a US dollar bank account, which is a foreign currency account, to a home currency bank account; SGD20,137.48 is received in the home currency bank account. 

QuickBooks 2015 allows up to 5 decimal places in the exchange rate between the US dollar and the Singapore dollar. The nearest exchange rate you can use for this transfer is 1USD:1.34250SGD; hence, SGD20,137.50 is debited to the QuickBooks home currency bank account. 

QuickBooks Transfer Funds

Since the amount recorded in QuickBooks (SGD20,137.50) is different from the actual amount received in the bank (SGD20,137.48), a home currency adjustment journal is needed to adjust between the home currency value of the foreign currency bank account and the amount recorded in the home currency bank account.  Pass a home currency adjustment journal to debit SGD0.02 to the foreign currency bank and credit SGD0.02 from the home currency bank.

A home currency adjustment journal is a journal to adjust the home currency value; therefore, the foreign currency balance of the foreign currency bank account remains unchanged. Whereas the home currency equivalent value of the foreign currency bank account increase by SGD0.02 and the home currency bank account has reduced to SGD20,137.48 (SGD20,137.50 – SGD0.02), which is the actual amount received in the home currency bank.

QuickBooks | Home Currency Adjustment disappears after upgrade

Software: Reckon QuickBooks (Reckon Accounts)

For those users who upgraded their Reckon QuickBooks (especially upgraded from version 2011/12) to version 2012/13 or Reckon Account 2013 may have an error on those Home Currency Adjustment journals, which they had entered in the previous version of Reckon QuickBooks.

Assuming your Base Currency is SGD and you did a home currency adjustment in your earlier version of Reckon QuickBooks for SGD 100.50 gain for your USD Customer.

The double entry for this Home Currency Adjustment journal will be:

Account Debit Credit
USD Accounts Receivable 100.50
Exchange Gain/Loss – Unrealised 100.50

This is a home currency adjustment, it should not have any physical impact on your USD owed by the USD Customer.

However, after you migrated from your previous version of QuickBooks (especially from version 2011/12), this home currency adjustment journal that you did earlier will be converted into a USD amount instead of remanding as SGD (home currency).

To resolve the issue, you need to add a >.< into the memo field of your home currency adjustment journal. Example:

Account Debit Credit Memo
USD Accounts Receivable 100.50 >.<
Exchange Gain/Loss – Unrealised 100.50

This journal will allow Reckon QuickBooks 2012/13 (or Reckon Account 2013) to re-calculate and record it as a SGD (base currency) instead of USD amount (foreign currency).

You can view all your home currency adjustment journals by filtering your Custom Transaction Detail Report with Journal transaction for the Transaction Type and home currency adjustment account (such as Exchange Gain/Loss – Unrealised account) for your Account filter.

More information: http://www.quicken.com.au/kb/issue_view.asp?ID=4504

Manually Adjust Home Currency

Software: Intuit QuickBooks 2013 accounting software

Currency adjustment feature is one of the differences between QuickBooks Pro and QuickBooks Premier 2013.

QuickBooks Premier allows user to pass a currency adjustment journal automatically via a Home Currency Adjustment Wizard (From the Company menu select Manage Currency and follow by Home Currency Adjustment). The Home Currency Adjustment wizard will take you through the currency adjustment process. This wizard simplified the complicated home currency adjustment process.

QuickBooks Pro doesn’t have the Home Currency Adjustment wizard to guide you through the currency adjustment process; you need to manually pass the home currency adjustment via a general journal entry.

First, print an Unrealised Exchange Gain/Loss report from the Reports menu (from Reports menu, select company & financial and follow by unrealized gains & losses).

Then, from the Company menu, select Make General Journal Entries, to pass a home currency adjustment journal manually.

In the journal transaction, check the checkbox for home currency adjustment. All amount entered in this journal will be in your home currency.

Assuming you want to make a home currency adjustment for your foreign bank account, you need to debit/credit your foreign bank account and credit/debit the Exchange Gain/Loss Unrealised account.

As for accounts receivable or accounts payable adjustment a Customer or Supplier is needed to associate with the Receivable or Payable account.

Assuming you need to pass a home currency adjustment journal for a foreign accounts receivable account (such as USD). First, you create a foreign currency customer (USD currency) and name it as USD AR Adjustment.

Next, create a home currency adjustment journal and debit/credit USD Accounts Receivable account and select USD AR Adjustment customer name at the Name column. Then, credit/debit the Exchange Gain/Loss Unrealised account on the following line.

Home Currency Adjustment Journal

Note: On the following month (first day of the month) you need to manually pass a journal to reverse the home currency adjustment journal, which you passed at the end of your previous month.

The basic rule still applied for the currency adjustment journal, that is, you are not allow to have more than one accounts receivable or accounts payable in journal; neither you can mix accounts receivable and accounts payable in a journal.

If you are using multiple currencies, go for the QuickBooks Premier rather than QuickBooks Pro; with a Home Currency Adjustment wizard it does simplify your Home Currency Adjustment process.