do you receive products or services from overseas vendors whom you continuously
owe a balance to well then you should learn about how to use the multi-currency feature
when dealing with accounts payable
the accounts payable feature in quickbooks is only necessary when you owe money
directly to the vendors who you who perform services for you usually
you need to continuously owe them for more than one month's worth of service or bills
in order to benefit from using the enter bills pay bills window in the accounts payable feature
in quickbooks so why is this an accounts payable issue well that's because on the
day you receive the service from the vendor the dollar amount of the currency you owe is based on
the exchange rate on the day of service or product delivery and that should be the date of the bill
so let's imagine that you got a bill for ten thousand guyana dollars and on that day
that bill and those 10 000 were worth 80 us dollars now let's imagine on the day you go to pay
the vendors bill the value of that same currency is different because exchange rates change
every day well in a case like that you would have a gain or loss on the exchange at the moment you
use the pay bills window to pay the bill to the international vendor for example let's imagine
on april 2nd you received delivery service from gina casino and a bill for the service
in the amount of ten thousand guyanese dollars and it was bill number eight four seven two
the guyana dollar was worth only point zero zero eight us dollars at the moment we received
the service and the bill so what will be the result well we know that accounts payable guyana
dollars will show up for the first time as 80 u.s dollars because that's point zero zero eight of
ten thousand so the equivalent of us dollars that you owe will be eighty dollars for the service you
received and because you owed eighty dollars that means you received a service worth eighty dollars
and because it was delivery service that you received delivery expense will increase by 80
us dollars and become 738 and 40 cents from the top left we click new go to the column of vendors
and click bill now the date is april 2nd and the vendor is gina casino
the guyanese dollar was worth 0.008 u.s dollars at the moment we received the service and therefore
entered the bill and the bill is delivery expense so we put in the amount of the bill
in terms of guyana dollars guyanese dollars and that's all you have to do to record it it's the
same like recording anything else and it gives you the appropriate totals in the bottom right
now click save and close and when we click reports trial balance you can see the results are exactly
as what we expected we owe the equivalent of 80 u.s dollars to gina casino in the new accounts
payable for guyana dollar and our delivery expense increased to 738 dollars and 40 cents
and let's imagine on april 8th we transferred in enough money from the chase bank account
to the guyana bank account to be able to pay the whole bill from gina casino on april 8th
the guyana dollar was worth only 0.007 of the u.s dollar so to make sure that we transfer 10 000
guyana dollars we deposited and transferred 70 u.s dollars into our guyana bank account
and that became 10 000 guyana dollars that we will then pay from so what will be the result
just after transferring the money well the bank of guyana increases to 70 us dollars
because that's what the 10 000 guyana dollars were worth at the moment we transferred it
and if 70 us dollars transferred to the guyana bank that means the chase bank account here
in america decreased by 70 dollars and becomes two thousand four hundred ninety three dollars
at the moment we transfer the ten thousand units of currency at point zero zero seven so these
will be the results after the transfer on april 8th from the top left click new go over to other
and click transfer the date of the transfer is april 8 and we're transferring from the
chase bank in us to the bank of guyana and the rate of exchange or conversion on that date
is .007 and the amount in terms of guyana dollars in terms of the account we're transferring to
ten thousand so we're transferring the equivalent of seventy us dollars because it's ten thousand
guyana dollars at point zero zero seven when we click save and close the results when we click
reports trial balance are exactly as what we expected bank of guyana now has a balance of 70
and our chase bank decreased to 2493 now let's continue the example and on the same day
april 8 we actually pay gina the 10 000 guyanese dollars that we owe her so at the moment we pay
on the same day of the transfer what is the gain well we originally owed 80 u.s dollars
because that was what it was worth when we got the bill but at the moment we pay we only owe
70 u.s dollars because the 10 000 guyana dollars what that we owe are now only worth 70 us
dollars so the decrease per guyana dollar is .001 and that means that when we go to pay this bill
we will have a gain of 10 u.s dollars because we actually owe ten dollars less from the moment we
owed the money till the moment we paid as a result of the exchange gain so what will be the result
after we after we pay well both the bank of guyana and accounts payable guyana should both become
zero bank of guyana becomes zero because we gave all ten thousand units to gina
and accounts payable guyana should become zero because we gave all ten thousand units to gina but
we had a ten dollar gain which will increase our net gain or loss on exchange and it will become
thirty one dollars and fifty cents let's go ahead and pay the bill from the top left we click new
pay bills now it may look like you don't have any bills to pay but if you change the currency from
dollar to guyana dollar you can see that this is the bill that we entered a moment ago
now we put the pay date which is april 8th and you have to click the check mark
if you're paying the entire bill so the money is coming from the bank of guyana and you're paying
the entire bill all ten thousand guyana dollars but now this is a slight problem do you see this
i have a problem right here and then let's see if we can work together to solve it you see
this is kind of weird my quickbooks online might not be working correctly today
because there's no place on the screen to input the exchange rate at the moment of the
bill payment if i look very closely at each of the different fields in the entire window
maybe if i max it out nope scroll down right move this over that nothing nothing i don't see a field
where i can enter the exchange rate you see so what i'm going to have to do instead
is save it with the wrong number and you'll get all kinds of crazy results but then
reopen it and when you reopen the bill payment or at least when i reopen the bill payment
there's a little box there for me to put in the exchange rate and that will fix everything