Expert: Ed McFarland - 9/8/2004

Question
Dear Ed

I've searched the net but can't find what I need. :-(

I'm trying to find a simple guide to how to treat foreign currency payments and convert them into my local currency in my accounts.  All the accounting books don't touch the issue.  What I need is some examples (perhaps in T-Accounts style) that cover the area.

Example: I have a client that wants to sell an article through me (the middleman) in USD.  My currency is GBP.  I need to record the sale in USD for the client, extract a commission in GBP, and make my books balance.

Can you possibly point me in the right direction please.  I appreciate that this might be a complex area so perhaps you know of an online resource that I might look at.

BTW, I am also on Allexperts, but for Indian Food.

Kind Regards
Ashley Kitson

Answer
Try this link: http://www.financialmanagementdevelopment.com/slides/DAP142.htm

Its been a while since I had to reconcile fx, but to make it work you need an account for the gain or loss in the translation of dollars to sterling.

I think the example I found should be what you need.

Good luck.