@Tut Correct. Unfortunately it is a complicated arrangement: my base currency is ZWL, my foreign suppliers charge in ZAR, my bank pays this from a USD account into which I have to deposit USD cash, and the freight-in charges are a combination of ZAR on the original supplier invoice and ZWL (and sometimes also USD) on a separate invoice. I use the bank’s conversion from USD to ZAR for the payment of the supplier, but as far as I can tell I need to do the conversions for freight-in manually where it is entered in ZAR on the supplier invoice from payments made in ZWL (and sometimes also USD) at a later date.
Here is a simplified example:
Sales invoice SI#001 received from supplier on 01/03/2020, with exchange rates at:
ZAR:USD = 15
ZWL:USD = 18
ZAR:ZWL = 0.833333
| SI#001 | 01/03/2020 |
|---|---|
| Goods | ZAR 10,000 |
| Courier charges | ZAR 1,000 |
| Total | ZAR 11,000 |
Sales invoices SI#002 and SI#003 received from freight company on 01/04/2020, with exchange rates at:
ZAR:USD = 20
ZWL:USD = 25
ZAR:ZWL = 0.8
| SI#002 | 01/04/2020 |
|---|---|
| Duty on goods | ZWL 5,000 |
| Clearing fees | ZWL 500 |
| Total | ZWL 5,500 |
| SI#003 | 01/04/2020 |
|---|---|
| Duty on goods | USD 20 |
| Total | USD 20 |
When I enter SI#002 and SI#003 into Manager, I allocate the charges to my “Freight clearing” clearing account. It then has a balance of ZWL 5,500 from SI#002 + ZWL 500 from SI#003 = ZWL 6,000.
When I enter this as a Freight-in charge on SI#001, I need to calculate the amount in ZAR that would exactly offset the ZWL 6,000. So to do that, I convert the USD amount from SI#003 to ZWL (my base currency) at the rate on the day SI#003 was issued, which gives ZWL 500. I then convert both ZWL amounts to ZAR at the rate on the day SI#001 was issued, which gives:
SI#002: 5,500 / 18 × 15 = ZAR 4,583.33
SI#003: 500 / 18 × 15 = ZAR 416.67
Total = ZAR 5,000
which I then enter into SI#001:
| SI#001 | 01/03/2020 |
|---|---|
| Goods | ZAR 10,000 |
| Freight-in (Courier charges) | ZAR 1,000 |
| Freight-in from SI#002 | ZAR 4,583.33 |
| Freight clearing account | ZAR -4,583.33 |
| Freight-in from SI#003 | ZAR 416.67 |
| Freight clearing account | ZAR -416.67 |
| Total | ZAR 11,000 |
This clears the “Freight clearing” account to ZWL 0, and I have my freight-in charges distributed across my inventory items.
I could, of course, combine the amounts from SI#002 and SI#003 when I enter them into SI#001 above, but I like to keep them separate like this for helping me track and verify all the costs.
Note, however, that I don’t work backwards from the “Freight clearing” account to work out how much needs to be offset in the original sales invoice. I do the calculations manually using the amounts on the freight invoices and the exchange rates on the relevant days, and only use the “Freight clearing” account as a check that verifies my calculations. If it has a non-zero amount then I’ve made a mistake somewhere.