Worked Example of Accounting Entries for Import using a Foreign Purchase Order
Let's consider the following scenario:
-
The PO quantity is 10 units at $8.00 and the user entered conversion rate ratio is 1:3
-
On the fiscal document, the quantity is 10 units and the amount is BRL 24.00. The user entered conversion rate ratio is 1:3 and converted PO amount is $8.00
The following table explains the distributions in Accounts Payables for an invoice quantity of 10 units:
|
Accounting Entry Type |
Transaction Type |
Entered Currency |
Functional Currency |
|---|---|---|---|
|
Debit |
Supplier Accrual |
$80.00 |
BRL 240.00 |
|
Credit |
Liability |
$80.00 |
BRL 240.00 |
The following table explains the distributions in receipt accounting for receipt quantity of 10 units:
|
Accounting Entry Type |
Transaction Type |
Entered Currency |
Functional Currency |
|---|---|---|---|
|
Debit |
Receiving Inspection |
$80.00 |
BRL 240.00 |
|
Credit |
Supplier Accrual |
$80.00 |
BRL 240.00 |
|
Debit |
Receiving Inspection (Nonrecoverable Tax)** |
$6.00 |
BRL 18.00 |
|
Credit |
Tax Liability |
$6.00 |
BRL 18.00 |
|
Debit |
Tax Recoverable** |
$2.00 |
BRL 6.00 |
|
Credit |
Tax Liability |
$200 |
BRL 6.00 |
The following table explains the distributions in cost accounting:
|
Accounting Entry Type |
Transaction Type |
Cost Element |
Entered Currency |
Functional Currency |
|---|---|---|---|---|
|
Debit |
Inventory (Material) |
Material |
BRL 240.00 |
BRL 240.00 |
|
Credit |
Receiving Inspection |
Material |
BRL 240.00 |
BRL 240.00 |
|
Debit |
Inventory (Nonrecoverable Tax) |
Nonrecoverable Tax |
BRL 18.00 |
BRL 18.00 |
|
Credit |
Receiving Inspection |
Nonrecoverable Tax |
BRL 18.00 |
BRL 18.00 |