Payment to Supplier in Foreign Currency[MIGRATED]

Migrated to http://wavelet.asia/customer-portal/2011/06/28/payment-to-supplier-in-foreign-currency/

How to record a payment to supplier in foreign currency?
Payments made to suppliers existing outside of Malaysia may require the user to pay for goods in a foreign currency. Therefore, the user will bear the risk of change in exchange rate, resulting in a foreign exchange Gain or Loss. This arises due to the difference between the exchange rate on the day of receiving the goods and the day of payment. 
Co. ABC bought goods priced at USD 1,000 from Co. DEF in USA. ABC received the goods on the 5th of January 2009 but will only make the payment on the 14th of January 2009.
  • Open a payment voucher to record the payment of USD 1,000 made on 14 January 2009.
  • Supplier > Finance > Payment Voucher > Create
  • Select a branch and click 'Set'. Then select Cashbook or enter a Cheque number or Bank Transfer number (TT), depending on the mode of payment to be made.
  • Enter 'Pay To' or click 'Select Supplier' on the right.
  • Input remarks and date. Select 'Checked by' and 'Approved by'. Click 'Set'.
  • In the yellow area, select a foreign currency (from eg. USD) and enter currency rate for the day the payment is made. Then, click 'Set Foreign Currency'.
  • Amount to be paid in RM 3,450 (USD 1,000 x 3.45) will be shown at the bottom.

  • Click 'Settle Supplier Invoices' on the left to settle the invoice issued by the supplier on 5th of January 2009.

  • A pop-up will appear.
  • Search DEF Co. from the 'Supplier' link on the left. Then, input the amount to be paid and click 'Auto Settle' or input the amount in the List of Outstanding Invoices to be Settled if partial payment or selected invoices is to be paid. Click 'Submit Settlement' and 'Confirm and Save'.

  • It will then appear as follows:
    • where the amount owing to DEF Co. at invoice date is RM 3,600 (USD 1,000 x 3.6) (the exchange rate is 1 : 3.6).
    • but the amount paid at 14 January 2009 is RM 3,450.
    • a Gain in exchange rate of RM 150 (RM 3,600 - RM 3,450) will be automatically recognized in the Profit or Loss Statement.