Recording multi-purpose bank transactions

TheReluctantAccountant · ‎March 13, 2019

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?

Anonymous · ‎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.

View solution in original post

Anonymous · ‎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.

TheReluctantAccountant · ‎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.

TheReluctantAccountant · ‎September 01, 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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Recording multi-purpose bank transactions