Examples of Cross-Currency Receipt Applications
The following examples illustrate the calculations and journal entries when you apply cross-currency receipts.
In the first example, you apply a receipt in one currency to an invoice in a different currency. Both the invoice currency and the receipt currency are different from your ledger currency.
In the second example, you apply a receipt in one currency to three separate invoices, each in a different currency.
Apply a Receipt to One Invoice
On JAN-01 you create Invoice 101 for 100 Canadian dollars (CAD). The corporate conversion rate on JAN-01 is 1 USD = 1.5 CAD. Receivables uses this rate to calculate the amount of the invoice in your ledger currency as 66.67 USD (100 / 1.5 = 66.67).
Receivables creates corresponding journal entries for this amount in both the invoice currency and your ledger currency, as illustrated in this table:
|
Account |
Debit |
Credit |
|---|---|---|
|
Accounts Receivable |
100 CAD [66.67 USD] |
None |
|
Sales |
None |
100 CAD [66.67 USD] |
On JAN-31, you receive a payment of 64 EUR for Invoice 101. Your customer informs you that the entire amount (64 EUR) is a partial payment of 90 CAD for Invoice 101. The corporate conversion rate on JAN-31 is 1 USD = 1.13 EUR. When you enter the receipt information, Receivables uses this rate to calculate a receipt amount in your ledger currency of 56.64 USD (64 / 1.13 = 56.64).
When you apply the receipt to Invoice 101, Receivables displays the balance due in your ledger currency (Balance Due Base) and in the invoice currency (Balance Due), as follows:
|
Invoice Number |
Balance Due Base |
Balance Due |
Amount Applied |
Amount Applied Base |
Cross-Currency Rate |
Allocated Receipt Amount |
Allocated Receipt Amount Base |
Exchange Gain/Loss |
|---|---|---|---|---|---|---|---|---|
|
101 |
66.67 |
100.00 |
NA |
NA |
NA |
NA |
NA |
NA |
Following your customer remittance information, you enter a new value of 90 in the Amount Applied field. Receivables calculates the amount applied in your ledger currency (Amount Applied Base) and updates the balance due in your ledger currency (Balance Due Base) and the invoice currency (Balance Due), as follows:
|
Invoice Number |
Balance Due Base |
Balance Due |
Amount Applied |
Amount Applied Base |
Cross-Currency Rate |
Allocated Receipt Amount |
Allocated Receipt Amount Base |
Exchange Gain/Loss |
|---|---|---|---|---|---|---|---|---|
|
101 |
6.67 |
10.00 |
90.00 |
60.00 |
NA |
NA |
NA |
NA |
The calculations used to arrive at these amounts are:
-
Balance Due = 100 - 90 = 10 (CAD)
-
Balance Due Base = 10 / 1.5 = 6.67 (USD)
-
Amount Applied Base = 90 / 1.5 = 60 (USD)
You then enter the amount of the receipt to apply to this invoice (64 EUR) in the Allocated Receipt Amount field. Receivables uses this amount to determine the Cross-Currency Rate of 0.7111111 (64/90). Receivables then determines the Allocated Receipt Amount Base (in your ledger currency) of 56.64 USD, using the conversion rate as of the receipt date. Finally, Receivables calculates an Exchange Loss of 3.36 USD.
This is represented as follows:
|
Invoice Number |
Balance Due Base |
Balance Due |
Amount Applied |
Amount Applied Base |
Cross-Currency Rate |
Allocated Receipt Amount |
Allocated Receipt Amount Base |
Exchange Gain/Loss |
|---|---|---|---|---|---|---|---|---|
|
101 |
6.67 |
10.00 |
90.00 |
60.00 |
0.7111111 |
64.00 |
56.64 |
<3.36> |
The calculations used to arrive at these amounts are:
-
Cross-Currency Rate = 64 (EUR) / 90 (CAD) = 0.7111111
-
Allocated Receipt Amount = 64 (EUR) / 1.13 = 56.64 (USD)
-
Exchange Gain/Loss = 56.64 (USD) - 60 (USD) = <3.36> (USD)
Receivables creates the accounting entries as illustrated in this table:
|
Account |
Debit |
Credit |
|---|---|---|
|
Cash |
64 EUR [56.64 USD] |
None |
|
Foreign Exchange Loss |
3.36 USD |
None |
|
Accounts Receivable |
None |
90 CAD [60 USD] |
Apply a Receipt to Three Invoices
Your customer remits Receipt 1234 for 300 EUR and wants this receipt applied to three outstanding invoices:
-
Invoice 101 for 100 Canadian dollars (CAD)
-
Invoice 102 for 100 US dollars (USD)
-
Invoice 103 for 8000 Japanese yen (JPY)
Your customer provides remittance information, including rate information, as described in this table:
|
Invoice Number |
Date |
Invoice Balance |
Paid Amount |
Rate to EUR |
EUR Remitted |
|---|---|---|---|---|---|
|
101 |
1-JAN |
100 CAD |
90 CAD |
.725298 |
65.28 |
|
102 |
2-JAN |
100 USD |
100 USD |
1.15989 |
115.99 |
|
103 |
4-JAN |
8000 JPY |
8000 JPY |
.0086927 |
69.54 |
Activity totals:
-
Total Remitted Amount: 250.78 EUR
-
On Account: 49.22
-
Total Remittance: 300.00 EUR
After you enter and apply the receipt according to the customer remittance information, this is represented as follows:
|
Invoice Number |
Balance Due Base |
Balance Due |
Amount Applied |
Amount Applied Base |
Cross-Currency Rate |
Allocated Receipt Amount |
Allocated Receipt Amount Base |
Exchange Gain/Loss |
|---|---|---|---|---|---|---|---|---|
|
101 |
6.67 |
10.00 |
90.00 |
60.00 |
.725298 |
65.28 |
57.14 |
<2.86> |
|
102 |
0.00 |
0.00 |
100.00 |
100.00 |
1.15989 |
115.99 |
99.12 |
<0.88> |
|
103 |
0.00 |
0.00 |
500.00 |
96.15 |
.0086927 |
69.54 |
94.61 |
1.54 |
|
On Account |
NA |
NA |
NA |
NA |
NA |
49.22 |
6.27 |
NA |