Unrealised foreign exchange loss journal entry

I would really appreciate some guidance as the best way to account for Forex gains and losses for creditors and debtors. At month end, we set a new FX rate, and revalue the outstanding debtors and creditors. If the debt is still outstanding at the start of next month, what do I do?

Understanding Currency Accounting: Exchange and Revaluation

When the debt is paid what should happen? Do you have to do monthly reporting? I only ask as it sounds like you're not using a system that does this for you, and as a result it sounds like monthly reporting may not be a requirement. For monthly management accounts what you suggest is about right. Just re-calc your fx debtors and Creditors at the month-end rate and do a provision, as a reversing journal if your system allows it.

As you say; when your Dr pays, or you pay a Cr, you should post the diff. Be wary of sytems that claim to do all this for you; they sometimes do very strange things! I prefer to do it by hand so that I know what has gone on!!! Sage L50 does revalue both the debtors and creditors ledger - you just need to activate the setting. Each system I have worked with has its own quirks as to how it achieves the desired result.

What a convoluted procedure to achieve the desired result! I do need to report monthly, and we are just implementing SAP Business One, which will report monthly for me. Your reply has helped. I shall now go and test this out in our test system, and check I understand the entries it makes.

illustration entries for currency exchange gains and losses

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A fool-proof procedure would be appreciated. You have got the gist of it Liz Hi Liz For monthly management accounts what you suggest is about right.

Sage L50 does revalue both the debtors and creditors ledger - you just need to activate the setting It's no by default. Trusting a system to do it I will only trust a system to do the right thing when I: Anyway, thanks titanneil for your reply.

What to do Hi, What to do if starting balances is "Zero"?

To record unrealized gains and losses

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