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TheReluctantAccountant
March 13, 2019
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Recording multi-purpose bank transactions

  • March 13, 2019
  • 1 reply
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I deal in multiple currencies.  When I exchange foreign currency to my home currency, I often will make wire payments to overseas suppliers at the same time.  This creates one withdrawal from the foreign account that needs to be split into bill payment X and Y, and the remainder is exchanged a 1.2345 to home currency.

 

What is the best way to record this?  A general journal entry?  Or will that leave the bills as forever unpaid?  How can I keep this organized for account reconciliation later?

Best answer by

My guess is that you are using a service other than your regular bank to make that exchange+transfer.  Suggest you setup a 'bank' account for the foreign exchange service - this will be a 'foreign' bank account.  The enter the transaction in steps - foreign transfer from bank to FX account, foreign bill payments from FX account, foreign check from FX account to home bank. Apply same exchange rate to all steps. 

1 reply

A
Anonymous
Answer
March 18, 2019

My guess is that you are using a service other than your regular bank to make that exchange+transfer.  Suggest you setup a 'bank' account for the foreign exchange service - this will be a 'foreign' bank account.  The enter the transaction in steps - foreign transfer from bank to FX account, foreign bill payments from FX account, foreign check from FX account to home bank. Apply same exchange rate to all steps. 

T
TheReluctantAccountantAuthor
September 12, 2019

Interesting suggestion.  I'll have to try it out and let you know.  Yes, I am using an outside FX vendor as their spread and fees are much better than my home bank.

T
TheReluctantAccountantAuthor
September 1, 2020

Note to anyone else trying this, do the following steps:

- Record all expense payments to your HoldAcct with the same date as the payment

- Record any fees, etc to your HoldAcct with the same date as the payment

- In the real bank record, add an Expense from the bank to the HoldAcct

- Check the chart of accounts to make sure HoldAcct is back to $0

(If you mark it as a transfer between accounts, it doubles the debt in the HoldAcct).

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