do you need to receive payment in a foreign currency in order to keep
certain customers well then you need to know how to record receiving payment in a foreign currency
if you have any questions about this topic you can leave them in the comments section below and
i'll do my best to help you and of course if you feel the video helped you i hope you will click
like and don't forget to subscribe to get updates on new videos that come out all the time
sometimes we need to receive payment in a foreign currency in order to have certain customers we
therefore must have a bank account that has funds in the currency of the other country
after the administrative tasks necessary to open an account with the other currency you are then
able to receive payments from customers who can only pay in their own home countries currency
when you receive payment from a customer into the foreign currency bank account the currency has a
specific value in us dollars on the day their payment is deposited quickbooks will remember
the dollar value per unit for each of the units of the currency you receive this value is from the
exchange rate on the day the customers payment was deposited into your foreign currency bank account
for example let's imagine on february twenty two uh february of twenty twenty one we started doing
business with henry goodman from guyana he pays us in guyanese dollars not us dollars in order
to service him we must agree to receive payment from him in guyanese dollars dollars therefore
we must have an account in the first bank of guyana which is an account in a bank in guyana
in order to receive payment in guyanese dollars and possess units of this currency
so from the main menu we click list chart of accounts now we go to the bottom and we click
account new now this is a bank type of account we click continue and the currency will be one of the
active currencies so if you watch the prior video you know that these were the currencies that we
activated and we will choose guyanese dollar and the name of it can be bank of guyana and spelling
doesn't count save and close now we're physically ready to receive guyanese dollars don't forget
that in our customer records we already put henry goodman and henry goodman accepts guyanese dollars
we had already put that when we set up the file for the course so let's do the example transaction
let's imagine on february 8th we did legal services for henry goodman
for 10 000 guyanese dollars and made an invoice for him the guyana dollar at this moment february
8th is worth point zero zero five dollars well that should be easy so customer create invoice
the customer is henry goodman and the date was february 8th and the service was legal services
and henry goodman gets paid in guyanese dollars ten thousand and now we must change the rate
to be what we need it to be point zero zero five u.s dollars on exactly february eighth
twenty twenty one that means that we are oh we owe or we are owed fifty u.s dollars for the 10
000 guyana dollars that we are billing henry for and when we click save and close you can see the
trial balance reflects accounts receivable in guyana dollars 50 and income from legal fees
has just increased by the 50 us dollars that is equivalent to the 10 000 guyana dollars that we
just build henry for the most important thing to learn regarding multi-currency in quickbooks is
that the quickbooks customer records will remember that accounts receivable guyana
has 10 000 units of currency in this case guyana dollars and each was promised to us
at the moment that each one was equal to .005 of a us dollar the most important thing to remember
is that quickbooks has this data about each unit of currency somewhere behind the scenes
you cannot check this but you will see the results of this and it will confirm that quickbooks tracks
all individual units of currency and what rate they were acquired at now you will see a
demonstration of this and you will see the result so let's continue with our example let's imagine
on february 11 we received payment for the henry goodman invoice now let's imagine on february 11th
that we only received five thousand of the ten thousand guyanese dollars listed on the invoice
at the moment the money was deposited from henry into our guyana dollars bank account
on february 11 each guyana dollar was worth point zero zero six u s dollars
so what's the gain well the guyana dollar was .005 at the moment we made the invoice
and now at the moment we're getting paid the guyana dollar is now worth .006 there is an
increase per guyana dollar of .001 and since we received 5000 of the 10 000 that means the gain
from this payment that we receive is five dollars five us dollars worth of guyana dollars anyway
five us dollars is the gain because it's .001 of a dollar times five thousand so what will be the
result after receiving the first five thousand guyana dollars well we received half of what is
owed to us so accounts receivable guyana will decrease from 50 to 25. however we received 30 u.s
dollars worth of guyana dollars deposited into the bank account so first bank of guyana will show up
for the first time with a thirty dollar balance because that is the us dollar equivalent
of the five thousand guyana dollars we received at the moment the exchange rate was point zero zero
six and the five dollar difference goes to exchange gain or loss so instead of having a 3.70
debit adding five dollars on the credit side makes a net credit or a net gain of a dollar thirty
these will be the numbers if we properly record this transaction from the main menu we click
customers receive payment the date of the payment is february 11th the customer was henry goodman
now the exchange rate on the day we got paid is point zero zero six and we only received five
thousand out of the 10 000 guyana dollars so we received 5 000 guyana dollars
and at the exchange rate of 0.006 on february 11th and we click save and close oh excuse me
uh the amount up here got to put the same amount in the top of the window as the bottom
so you can see if the exchange rate is point zero zero six and we receive five thousand
that we're getting thirty we're getting the equivalent of thirty us dollars when we get
the five thousand guyana dollars save and close and the results are exactly as what we expected
account receivable guyana decreased by half went down to 25 because we received half of
the guyana dollars they were worth thirty dollars and that's why our balance of the bank of guyana
shows thirty dollars and the difference was a five dollar loss that was recorded here in exchange
gain or loss and if i double click you can see the balance was a three dollar and seventy cents
debit then i made a credit of five dollars making it a credit balance of a dollar thirty
now to properly learn this we have to follow through and finish our example let's imagine on
february 15th we received payment for the henry goodman invoice we received the remaining 5000
of the 10 000 guyanese dollars listed on the invoice at the moment the money was received from
henry each guyana dollar was worth point zero zero seven u s dollars so what was the gain well the
remaining five thousand guyana dollars on the open invoice are still valued by our quickbooks at .005
per dollar because quickbooks remembers that was the value at the moment the invoice was made
the dollar is now .007 guyana dollars so the increase per guyana dollar is .002
from the time that we made the invoice and the time we're getting paid these last five thousand
so if you take the increase per unit and multiply by how many units you get
the gain that we're going to have as a result of receiving the balance of the invoice several days
later when the dot when the guyana dollar has now increased by .002 so what will the result
be after we receive payment on february 15th well we received all of the money for the open invoice
so the accounts receivable guyana should go down to zero and the amount in u.s dollars of 5
000 units times 0.007 would mean we received 35 u.s dollars into our guyana bank account
making the balance of the bank of guyana 65 dollars and the difference between the 65
the 35 dollars that increased our bank account and the 25 dollars that was on the invoice
is a ten dollar gain so the net gain will increase by ten dollars and become eleven
dollars and thirty cents and these will be the numbers after receiving the february 15th payment
where the guyana dollar has increased let's take a look at how to record it
from the main menu click customers receive payment the date we received it was february 15
a few days later the customer was henry goodman and we received five thousand guyana dollars
into our account now if it were only at six we would be receiving only thirty but it's not
it's at seven point zero zero seven exactly on february 15th a few days later so the amount of
u.s dollars that we're receiving we're receiving the equivalent of 35 u.s dollars on february 15th
when we click save and close the results and the trial balance are exactly as what you would expect
the bank of guyana increased by dollars and became sixty five account receivable guyana went down to
zero because the invoice is completely paid and the exchange gain increased to eleven thirty
and we can double click and we can see that this was the ten dollar gain from the payment on
february 15th that increased the net gain from a dollar thirty to eleven dollars and thirty
cents
you