foreign exchange problem

[Former Member]

Hi,

Our local currency is RMB, and there is one bank account set up as USD.

The case is like that, this bank account receive 10USD, equal 80 CNY in July for exmaple, then pay 10USD, equal 70 CNY in Aug.

Then if check this bank account, the USD balance is zero, but the RMB balance is 10CNY, the accounting people is unhappy with this, but in my view, it is normal.

Any one have this issue before, what is the best pratice?

Thanks

[Former Member · Accepted solution]

Hi,

Our local currency is RMB, and there is one bank account set up as USD.

The case is like that, this bank account receive 10USD, equal 80 CNY in July for exmaple, then pay 10USD, equal 70 CNY in Aug.

Then if check this bank account, the USD balance is zero, but the RMB balance is 10CNY, the accounting people is unhappy with this, but in my view, it is normal.

Any one have this issue before, what is the best pratice?

Thanks

Reply :

Accounting is perfect. The result is Account is cleared in Foreign currency and not in local currency.

You need to do a clearing in foreign currency to clear off this account - the difference will get posted to Exchange Loss/Gain account - as the case may be.

Please use the program :

F13E - With Specification of Clearing Currency

I think this will solve the problem of accounts also.

[Former Member · Accepted solution]

But we set bank account not open item management, i think that is not workable.

[Former Member · Accepted solution]

Hi,

The reason you are facing this problem, is that maybe you have only one GL account for the bank. Normally, this is how the bank accounts are set up.

You have one main account. This is not open Item managed (OI). You then have a minimum of two other bank accounts. One called the payment account and the other the collection account. These 2 are OI managed. The reason we do this is:

1. When you make a payment, you credit the payment account and debit vendor (or payable account)

2. When you receive money, you debit the collection account and credit the receivable.

3. When you do your bank reconciliation, you clear the payment or the collection account and post to the main account. In this case, if you receive a credit in your bank , i,e you receive money, then you credit the collection account and debit the main account, and you debit the payment account and credit the main account.

At the end of the reconciliation, your main account will be an exact mirror of the bank statement (i.e. a dr in your bank statement will appear as a Cr in your bank main account in you books).

If you set you bank accounts, as explained above, you should not have the problem you face, as you will have clearing accounts and the difference can be posted to the forex gain/loss acount.

Cheers..

[Former Member]

Hi David

How about using the program(T-code : F-05).

You mean that USD balance is zero, but RMB balance is 10CNY.

At the F-05, select transaction currency as USD.

then you input 0 USD in 'amount' field and input 10 CNY in 'amount in LC' field.

Try it .....

Regards

Sang lim.

[Former Member]

Hi David,

The transaction currency is in Dollars, hence the payment and receipt are in same currency, Foreign Exchange gain/loss will not come into picture.

But if you view in Company code RMB currency, there is a balance of 10, that correct.

In T-code OBA1 for transaction KDB, assign GL code Foreign Exchnage Gain/ loss for currency RMB.

Test this is development and confirm.

This should work.

Regards

Velu Mudaliar