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Previous Year Earnings for 1 Jan to match Current Year Earnings of 31 Dec the year before (Exchange

JoelleJoelle Member Posts: 1

My year end is 31 Dec. The "previous year(s) earnings" as shown ion 1st Jan 2016, is not the same as the "current year earnings" as shown on 31-Dec-2015. I have been told by support that this is due to Wave's system balancing out the Unrealized Foreign Currency Exchange Gains/Losses on my balance sheet because I have an unpaid customer invoice in a foreign currency created for that year 2015, and still unpaid when we cross into 2016.

However this creates a problem over the years that the current year earnings are not longer reflective as this discrepancy snowballs over the years. I would like to find a workaround a way to reflect the same figure for Previous Year Earnings for 01/01/2016 on the Balance Sheet to match Current Year Earnings for 12/31/2015 ?

For example, could I post a journal transaction, and then reverse it? If so, please let me know what are the dates of the journal transactions and which accounts to debit/credit in each posting. Or could I revalue the unpaid invoice value on 1/1/2016 to match the exchange rate obtained at 31-Dec-2015? I also note that the "current year's earnings" and "previous year's earnings" are all system accounts that I cannot journalise to.

Any help from the community is appreciated.

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    AlexiaAlexia Member Posts: 3,314 ✭✭✭✭

    Hi @Joelle.

    You are exactly right in assuming that this should be dealt with through journal entries. We're simply going to have to work around those system accounts and create our own.

    You'll have to create a new asset account, and a new income account. I recommend calling them "Foreign Currency Adjustment", or something along those lines. Whatever makes the most sense for you.

    Here are the steps to follow next.

    • Create a journal transaction dated on the 31st. It should mark a debit of the asset account for the amount of your unrealized income, and a credit of the income account.
    • Create a second journal transaction on the 1st. This one should just reverse the debits and credits of our first journal entry.

    This will ensure that your unrealized income is kept away from your year-end reports while still being taken into account in your books.

    Let me know if you have any other questions.

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