do you pay a fee to convert currency that you receive from your customers
before you can transfer it into your account
well this video will show you how to record fees for exchanges and deposits into quickbooks desktop
if you have any questions about this topic you can leave them in the comments section below and i'll
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in this second example the payment we receive from yuri will be directly deposited
into the bank account however if you need to deduct an exchange fee
you need to make an intermediate step you need to record the full payment in the
undeposited funds account then with the same date record the payment as deposited in the deposit
window that will give you the chance to deduct the fee for example let's imagine on january 25th
we did legal service for yuri bury and we built him for ten thousand rubles
each ruble was point zero one three dollars on this day january 25th on january 30th he pays
all ten thousand rubles the ruble is only worth point zero one two of the dollar on that day
the loss is ten dollars on the exchange just like we learned how to calculate in a prior video
and to add insult to injury they also deducted a twenty dollar fee for the currency exchange
and the transfer of funds so how do you handle this well you would record the payment the same
way that we learned in the prior video except this time you would not choose bank account
you would instead choose undeposited funds then immediately after recording the payment
you would open the deposit window and deduct the fee and record the net amount into your
account so first we record these two transactions january 25th we did uh legal service 10 000 rubles
.013 for yuri so let's record that customer create invoice the customer is yuri buri the date
is january 25th of 2021 okay now the item of service is legal services rendered
and the number of rubles on that day that we billed him for was ten thousand and they
were worth point zero one three so if you're following along and yours does not say point
zero one four three for the exchange rate then you type it in now let's just okay and then he'll pay
them oop and then he'll pay them so right now let's just record this invoice save and close
and we look at the trial balance we are owed 130 u.s dollars worth of rubles and we just earned
130 more dollars in legal service fee and that's the result after just recording the invoice
and now let's record the payment on january 30 the ruble was only worth 0.1012 of the dollar
when we got paid all ten thousand rubles so the loss on the exchange is
uh ten dollars because we calculate it just like we learned in the prior video
so what will be the result after step one just recording the payments into undeposited funds well
if they paid all ten thousand rubles then accounts receivable rubles will go down to zero and because
they were worth a hundred and twenty u.s dollars at the moment we received them then undeposited
funds will increase by a hundred and twenty dollars and become two thousand one hundred twenty
and the difference is a ten dollar loss now right now we have a six dollars and thirty cents gain
but if we put in a ten dollar loss against a six dollars and thirty cents gain we wind up with a
net loss of three dollars and seventy cents and these will be the numbers just after recording the
first step of receiving the payment so we click customers receive payments now we choose yuri
and we know that the date we received the money is january 30. and we know that at the moment
we received the money it was only worth .012 of a dollar not .013 so if we put in all 10 000 rubles
we're imagining we received all of the rubles that yuri promised to pay you can see that if the
exchange rate on the 30th is only 0.012 that we're only getting 120 us dollars and we have a 10 loss
so we click save and close and when we look at the trial balance the numbers are exactly as
what we expected undeposited funds went up to two thousand one hundred twenty
cash and bank only increased by well cash and bank didn't change just on deposit two thousand
one twenty account receivable went down to zero because they paid all of the rubles
that they were supposed to pay and the exchange gainer loss moved from the credit side to the
debit side here double click take a look it was a credit balance of six dollars and thirty cents
but then we made a debit of a ten dollar loss for this january thirtieth payment so the net result
is a net loss overall of three dollars and seventy cents for all the exchanges
and now that we've recorded that the very last step is to deduct out the fee and acknowledge
that it actually went into the bank account now we're recording this deposit on the same
date as the receive payment so the exchange rate will be the same the financial institution
deducted 10 000 rubles for the exchange to convert the currency to dollars and then transfer it into
our chase bank account and the expense that they deducted that we look that we record for the 10
000 rubles is an expense called extra exchange and transfer fees expense and if you don't have
it in your chart of accounts you should pause the video and put it in your chart of accounts
so what will be the results after this next step well the hundred twenty dollars will no longer be
in undeposited funds they will be moved to the bank account so undeposited funds goes down to
two thousand and the bank account goes up to two thousand six hundred and forty eight dollars
and of course the fee shows up as transfer fees expense in the u s dollar equivalent of
the thousand rubles that they deducted and at this moment that equivalent is twelve dollars and this
will be the result after the last step that we finish recording the deposit and deduct the fee
from the main menu we click banking make deposit now notice it's only showing us dollar payments
we have to change this to russian ruble and now we have all of the payments we received in rubles
click this one because this is the one we're depositing and we click ok and now under the
undeposited funds we click here and we find the expense that we put on the list
exchange and transfer fees expense click under the ten thousand rubles and put minus one thousand
rubles so they're deducting a thousand rubles okay which is basically equal to twelve dollars
just for this transferring and exchanging and converting the currency at the moment that they
put the money in our chase bank so our chase bank is only going to increase by a hundred and eight
dollars and undeposited funds will go down by the hundred and twenty and of course the exchange fee
will show up as twelve dollars when we click save and close you can see the numbers are exactly
as what we expected undeposited funds is two thousand even cash in chase bank is two thousand
six hundred forty eight because only a hundred and eight dollars was placed into the account
and after that last step we now properly acknowledge exchange and transfer fees expense
you