Forward Contract for Speculation that Foreign Currency 1420

QuickBooks Online 2021. forward contracts for speculation of that foreign currency will strengthen maturity date transaction within QuickBooks. Let’s get into it with Intuit QuickBooks Online 2021. Here we are in our QuickBooks Online problem to multiple currencies forward contract practice problem in prior presentations, we set up the free 30 day trial and turned on the multiple currencies once turned on can’t be turned off. Now we’re going to be then recording our transaction.


Let’s first open up our financial statements guy by going to the tab up top, then right clicking on it and duplicate will duplicate again by going to the tab up top right clicking on it and duplicating another time, well then go down to the reports on the left hand side, we’re going to be opening up the income statement. So we’re going to open up the profit and loss Report, I’m going to take a look at it for this year. This time, I’m going to take a look at this year, run it nothing there as of this point yet, holding down control scrolling up just a bit closing up the hamburger back to the tab to the left.



Now go into the reports on the left hand side, this time opening up the BS balance sheet report during the date range change up top once again this year. And then I’m going to run that report. And we will close up the hamburger there as well. So now we had this forward exchange contract on the books we had the receivable that represents what we’re going to be receiving in foreign currency 100,000 foreign currency units that we then had on the books and then valued as of the cutoff date 1231.



And then down here, we have the payable, which we’re going to be paying this one simply in the US currency dollar. Now we took a look at this in Excel. So if I go back on over to excel in a prior presentation, just to see it in a more transparent way, we saw the prior year information, this is what we had last period as of 1231, the receivable being different than the payable because the receivable being fluctuating, the item that fluctuates with the currency change, then down here, we had to then say now it’s going to become due, when it becomes do we then did an adjusting entry in order to get our our currency to the proper amount as of the current point in time.



And then we recorded the receiving of the payment and the payment of the payable, or the payment of the payable and the receiving of the receivable. So in QuickBooks, we’re basically going to do this was do this transaction a little bit later or think about that a little bit differently, we’re going to start off actually with these two transactions, and then think about whether or not we want to do basically a reversing entry kind of process because we want to make sure that we have the breakout between the accounting department and the adjusting department.



And then we got to make sure that we have this properly broken out in terms of the gain or loss in the prior year in the current year. So first, we’re going to go to the payable, it’s going to be payable and just say that we are going to pay that off. So if I go back then to our our QuickBooks, we have this payable on the books, we’re gonna pay that to the broker straightforward transaction, because we’re just going to simply pay it to the broker in cash, so no foreign currency problem with it. Note that we did put it on the books not as an accounts payable, but rather as an other current liability.



If it was on the books as an accounts payable, if I go back to the first tab, then we could have go into the plus button and simply use the pay bill feature to pay it off. But it’s on the books as an other current asset. And therefore we could pay it off with say, like an expense type form would probably be the most common type of thing. So I’m going to say it’s going to be like a cash transaction out of our US checking account.



Let’s make an expense type a form. to record the transaction, we’re going to scroll back down a little bit to 100%. And then I’m going to call this the broker broker and broker. And this is going to be the vend or broker vendor, I’ll say tab. So we’re going to set up that vendor so we can enter the expense for it. And so keep that looks good. It’s going to be in US dollars, in this case, because we’re paying this broker in US dollars, which I might have wanted to indicate. And in case I need another broker account for a vendor that’s going to be in foreign currency.



But in any case, then I’m going to say that the payment date, we’re going to say when did we pay this thing? It’s now 331. So 331, so I’m going to say oh 331 to 103 31 20212021. And then I’m going to keep the payment, I won’t put a payment method here. I’m going to say then down below, we will have the category that will be impacted and that’s going to be then the brokerage account. So we got the accounts. broker, what did I call it broker, US broker payable US dollar.



So that’s going to go down and then And the amount that we will be paying is simply the amount that is in that account, which was worth checking in QuickBooks, which was 60,900 60,900. So we’ll say 60, or 900 is straightforward transaction decrease in the checking accounts in US dollars by the 60,900, decreasing the payable, which was also recorded in US dollars by the same amount bringing the payable down to zero. Let’s go ahead and save it and close it, check it out, back to the report over here on the balance sheet, let’s run it again.



And we see that then the payable has now gone down to zero, we paid it off, and the checking account has no it has now gone down as well. So with checking account, now having been decreased, going back up top. Now we want to think about the kind of more difficult item here we’ve got the receivable, the receivable is now valued using the exchange rate as of 1231.



Now we’re going to imagine here being the accounting department saying, hey, look, the accounting department in the accounting process, when it becomes due, just go ahead and record the transaction using the current exchange rate. And then possibly in the adjusting area, we’ll make the adjustments, the adjustments that need to be made for the foreign currency gains and losses. That’s how we’re going to think about it a little bit differently in QuickBooks, therefore,



I’m not going to record this transaction first, which is going to be recorded or making the accounts receivable proper first, but rather just record the transaction, the foreign currency transaction, and then we will adjust this or thinking about the reversing entry process in a following presentation. So let’s think about you know what that would look like if I go on back on over here. Also, just note that if this was a receivable that we recorded as a receivable as opposed to an other current asset, as we saw in the prior practice problem,



then we would go over here and we would say, drop down, and we would say receive payment, we would use the receive payment form. And then QuickBooks will automatically record the gain or loss from the point in time that the payment was received to the point in time that it was paid. And then we tapped the reversing entry for the the adjustment we made at the end of the year in a similar way as we did with the prior practice problem. But we didn’t set it up in an accounts receivable account, we didn’t use an invoice and receive payment we could have, but instead we put it in an other current asset account.



So therefore, what we’re going to have, then is to say we’re going to receive cash, but we’re going to get cash into a checking account in foreign currency units. So we got to set up a foreign currency unit checking account. So I’m going to go down to the accounting down below. And we’ve got the US checking account, let’s add another one, I’m going to say add. And I want to make this is going to be a bank account. And it’s going to be a checking, but it’s going to be then in the Australian dollars, Australian dollars the AU D.



And I’ll label that up top checking, and we’ll call it so a UD to get checking account in foreign currency units, we’re going to save it and close it. And then I’m basically going to put a deposit into that checking account. So we’re going to say that we’re going to receive the money. So I’m going to say plus button. And we will then record a deposit a deposit. And this deposit is going to be going into the checking account we just set up in Australian dollars.



So Australian dollars. And now note, it doesn’t have the exchange rate down here because of course we’re in my purposes, we’re in the future. So we’re going to have to populate the exchange rate. But obviously, it would calculate then the exchange rate. And now because we’re getting paid, we’re not talking about the future exchange rate here, we would be talking about the actual spot rate, which QuickBooks should get, right, right, they QuickBooks should be able to populate that for us at this point in time. So the accounting department during the normal accounting process should be able to just pick up the current spot rate, which we’re going to imagine being point 602.



So we’ll say okay, point 602 on the spot rate, and then we’re going to say we received it from once again, I’m going to call this the broker. But this is going to be the customer broker. And that we’re going to have this time, so we’re gonna say tab, we’re going to receive it from the customer broker, and it’s going to be a customer and we’re going to be receiving it in foreign currency units. So I’m setting up a customer that will be in foreign currency units, because we’re going to be basically getting paid in the foreign currency unit.



So I probably should say customer, and then indicate that it’s going to be a UD customer. And so we’ll save that. So we’re going to get foreign currency units now. And the account that we’re going to have affected it’s going to be increasing the checking account because it’s a deposit. The other side is going to go to our receivable account, which we call receivable, exchange broker. That’s going to be The receipt Yeah, that’s the one. And so we’ll pick that up.



And then we’re going to say that the amount that we’re going to get is 100,000, not 100,000, representing then the foreign currency units, we’re getting 100,000, because we set this up as foreign currency units. And that means that the US equivalent is going to be the 60,200 USD equivalent 60,200. That is the same as what we had basically what we’re going to get in our practice problem, but it will not decrease or make our accounts receivable go down to zero yet, let’s record it and see what happens. We’re gonna say save it and close it, save it and close it.



And then we’re going to go back to our reports on the balance sheet, run it, hold down Control, scroll up just a bit. So now we’ve got our our foreign currency checking account after 60,200. That’s the 60,200. And that’s correct. Because if we go to our in our Excel sheet, we’ve got the 60,200. But if we go back on over the receivable down here, still has an amount in it of the 1000. And that, of course, is because we didn’t we didn’t make the adjustment for for the 1000 since the last point in time.



And then if I go back to the income statement, if I go to the income statement, and run this report, there’s nothing that’s being reported in the current period as far as income or loss. So that’s what we’re going to have to basically reconcile for next time. So we’re going to think about this process to get this, this basically should be down to zero after this transaction. And I would imagine this to basically say, Okay, this is what the accounting department does, they’re going to receive the payment in foreign currency units, and they can record that using the current spot rate.



And then in the adjusting department, we make the adjustment that needs to be made with the receivable. Going back down to zero, the further adjustment for the exchange rates. So we’ll talk about that. And we’ll think about that a little bit more in the following presentation. Let’s first take a look at the trial balance at this point. So I’m going to go ahead and go up top, go down to the reports.



And let’s open up the trusty trial balance trial balance. And we’ll see that in the current time period. Let’s just check out the current year as of now. So this is this year, run it and this is where we stand at this point doesn’t match what’s on Excel yet, until we till we fix it with the next transaction which we’ll take a look at next time.

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