JE-11 Apr 2026Manualposted
Invoice the customer in euros.
| Account | Dimensions | Debit | Credit |
|---|---|---|---|
| 1100 Accounts receivable | 21,700 US Dollar | ||
| 4000 Revenue | 21,700 US Dollar | ||
| Totals | 21,700 US Dollar | 21,700 US Dollar | |
Balanced.
Journal entry for a realized foreign exchange gain or loss
Book a foreign-currency invoice at the rate on the invoice date. When it is collected at a different rate, debit Cash for the dollars received, credit Accounts receivable for the dollars originally booked, and book the difference as a realized foreign exchange gain or loss.
- Booked at
- 1.0850 = $21,700
- Collected at
- 1.0720 = $21,440
- Realized loss
- $260
- Entity
- Illustrative company
- Basis
- Accrual
- Currency
- USD
- Period
- April – May 2026
The worked example
A US company invoices a German customer 20,000.00 EUR when the rate is 1.0850 USD per euro, booking $21,700. The customer pays when the rate is 1.0720, so $21,440 arrives — a $260 realized loss.
Transaction · April 1, 2026
Transaction · May 1, 2026
JE-21 May 2026Manualposted
Collect the euros and convert.
Journal entry JE-2, 3 lines Account Dimensions Debit Credit 1000 Cash 21,440 US Dollar 7100 Foreign exchange loss 260 US Dollar 1100 Accounts receivable 21,700 US Dollar Totals 21,700 US Dollar 21,700 US Dollar Balanced.
What the entries do to the accounts
Every entry above posted to the ledger, starting from zero balances: the net debit or credit each account is left with. Debits equal credits, so the books still balance.
| Account | Debit | Credit |
|---|---|---|
| 1000 Cash | 21,440 US Dollar | |
| 4000 Revenue | 21,700 US Dollar | |
| 7100 Foreign exchange loss | 260 US Dollar | |
| Totals | 21,700 US Dollar | 21,700 US Dollar |
One account nets to zero across the entries and is not shown.
Why it is booked this way
Revenue is fixed in dollars on the day it is earned. The receivable is in euros, and its dollar value moves with the rate until it is settled; that movement is a financing effect, not a change in what was sold.
On settlement the receivable is removed at the dollars it was booked at, the cash is recorded at what actually arrived, and the difference is realized.
Common mistakes
- Booking the collected dollars to revenue, so revenue moves with the exchange rate after the sale.
- Re-booking the invoice at the payment date's rate instead of recognizing a gain or loss.
Questions
- Where does an FX gain or loss go?
- Below operating income, in other income or expense, unless the company's policy presents operating FX within operations. It is not revenue.
- Which rate do I book the invoice at?
- The spot rate on the transaction date, or an average rate for the period if rates did not move materially.
Terms on this page
Work with this entry
The tool that computes the schedule, the concept behind it, the entries that come next and the components that render them.
- FX conversion & gain/lossThe rate is the one in your policy, so you type it. No live rate, no network call, no stale surprise. Put your own figures in and get the schedule behind this entry.Tool
- Wise, explained for foundersBalances in several currencies, mostly used to pay people and vendors abroad.Doc
- Realized FX gain or loss vs unrealized FX gain or lossA realized FX gain or loss is locked in when a foreign-currency item is settled; an unrealized one is the paper change in an item still open at a balance-sheet date — both go through the P&L under ASC 830.Compare
- Functional currency vs presentation currencyFunctional currency is the currency of the economic environment an entity operates in, in which its books are kept; presentation currency is the currency its financial statements are reported in — they differ when a group consolidates foreign subsidiaries.Compare
- Journal entry for an unrealized FX revaluationAt each month-end, remeasure open foreign-currency receivables and payables at the closing rate: debit the receivable and credit Foreign exchange gain when the dollar value has risen, or the reverse for a loss. The gain is unrealized until the item settles.Entry
- Journal entry for a sale on accountFor a sale on credit, debit Accounts receivable and credit Revenue for the price; under a perpetual inventory system also debit Cost of goods sold and credit Inventory for what the goods cost. When the customer pays, debit Cash and credit Accounts receivable.Entry
- Journal entry for a Stripe payoutBook charges gross: debit Stripe clearing and credit Revenue for every charge, debit Sales returns and allowances and credit Stripe clearing for refunds. When the payout lands, debit Cash for the payout and Merchant fees for the fees, and credit Stripe clearing — which should then be zero.Entry
- ConversionBreakdownAmount → fee → rate → recipient gets. Every line.Component
- JournalEntryDebit and credit as two columns. No signed-column variant.Component
An illustrative company, not anyone’s real books. Every figure on this page is computed from the inputs in the example and posted by the same functions as the journal entry balancer. General information for US companies under US GAAP, not accounting or tax advice.