QuickBooks Asia

Foreign currency journal

Either MoneyWorks or QuickBooks can't do the expenses journal in SGD (foreign currency) when your home currency is set to USD.

In either software, only Bank, Accounts Receivable and Accounts Payable account can be in foreign currency. All other accounts will be default to home currency.

When passing a journal in QuickBooks in SGD (Home currency set as USD) for:

Debit Utilities expenses (USD currency type): 1000.00

Credit Accrual - Expenses (USD currency type): 1000.00

A warning message will be prompt:

"The currency of the journal entry must either match the currency of the accounts selected or be your home currency."

Why the COGS pick up the foreign currency value instead of the home currency value

Why the Cost of Goods Sold account shows the foreign currency value instead of the home currency value?

 

Scenario:

Home currency was in Singapore Dollar.

01 Dec 2010, invoiced your customer for item A at S$1,000.00. 

05 Dec 2010, received Bill from your supplier for item A at US$550.00

The exchange rate for the month was at S$1.40 : US$1.00 and Item A was a new item in your inventory list.

 

After the above transactions were recorded into QuickBooks, you discovered that the Cost of Goods Sold in Profit and Loss report for Item A was recorded as 550.00 instead of showing 770.00, which was the correct value in Singapore dollar; it shows the US dollar value. 

What causes this problem?

When user recorded the invoice for Item A at S$1,000.00, it causes the quantity on hand for Item A to fall into negative (that is -1). Since it is a new item, there is no prior cost, when user recorded the Bill on 5 Dec; QuickBooks did an auto-correction in Cost of Goods Sold.

This seems to be a bug, by right, when Bill was entered, the auto-correction feature should pick up 770.00 (amount in Singapore dollar) but it pick up the US dollar value (550.00).

To correct this issue, user can consider changing the date of the bill to be before the invoice date (consider adding the original date in the memo of the bill). This will increase the stock on hand for Item A to 1 and update the average cost to 770.00. So, when invoice is done after the bill, the cost of goods sold will pick up the average cost correctly at 770.00.

The proper way of doing this is to record the invoice after the bill. You should not issue invoice when there is no stock. If you need to issue Proforma invoice, consider using Sales Order in QuickBooks instead of using Invoice feature.

 

You cannot use more than one A/R or A/P account in the same transaction

When creating a journal involving Accounts Receivable (AR) and Accounts Payable account, or two Accounts Receivable accounts or two Accounts Payable accounts, a warning message “You cannot use more than one A/R or A/P account in the same transaction” will prompted on the screen and not allowing you to save the transaction.

This is one of the most common issues a user face when trying to contra between Suppliers and Customers, between Suppliers or between Customers.

If you want to contra between Accounts Receivable and Accounts Payable, more than one Accounts Receivable accounts, or more than one Accounts Payable account; you have to do it in two separate journals. Usually, I will use a Contra account to resolve it.

Example: 

ABC (Customer) owes you $100, and you owe DEF (Supplier) $100.  Supplier DEF wanted you to use the $100 which you owe them to pay on their behalf to ABC. You need to transfer the Accounts Payable, amount owing to DEF, to ABC account. So, how to do it?

Since QuickBooks does not allow having Accounts Receivable and Account Payable in one General Journal transaction, that is, debiting Accounts Payable $100 and crediting Accounts Receivable $100. You have to break it out into two General Journal transactions.

Usually, I prefer to create a dummy account, Bank account type, and I named it as Contra account. Next, I will do the two journals. First journal will be debiting Accounts Payable $100 and crediting Contra account $100.  Second journal will be debiting Contra account $100 and crediting Accounts Receivable $100.

In this case, the Contra account will be zero off and will not show in the Balance Sheet report. However, you have to do a Receive Payment to knock off the Outstanding Invoice with the Credit balance (Journal) so it will not show as an outstanding amount in AR Ageing report. As for Accounts Payable, you have to do a Pay Bill to offset the Bill with the debit journal too.

The above method does resolving the issue for contra between Accounts Receivable and Accounts Payable, but I prefer to use direct payment method to contra between Accounts Receivable and Accounts Payable in QuickBooks.

Same as the above Journal method, I create a Contra account, Bank account type, then, I do a Pay Bill to supplier DEF. In the Pay Bill screen, instead of selecting your normal bank account for payment, I use Contra account. Enter the $100 bill payment as per normal. Next, I will do a Receive Payment of $100 from Customer ABC into the contra bank account.

In this way, I cut down the two general journals, and result is the same as the general journal method, that is, zero off Accounts Payable, Contra account and Accounts Receivable account.

 

Foreign Opening Balance amount in Custom Transaction Detail Report was not sum up

Some of the user did mention that when they creating a report using Custom Transaction Detail Report; the Foreign Open Balance field was not sum up at the bottom of the report. Comparing with the Open Balance column (Home Currency), the Open Balance field did sum up at the bottom but Foreign Open Balance was showing ‘0.00’.

 

Was it a bug? Any work around solution?

Am not sure was it considered as a bug to Reckon. However, I do have a work around solution for this. To display the Foreign Open Balance with a total of this column simple export it to Microsoft Excel. To export the report, click the ‘Export’ button at the top of the report. In Microsoft Excel, this report does show the total amount of Foreign Open Balance column.

 

In Microsoft Excel, the total field has a formula of [ =ROUND(SUM(Sheet1!P2:Sheet1!P5),5) ], am not sure why the original report in QuickBooks was not total up.

Hope this is helpful to you.