Accounting for payment into wrong currency account

Question

I deal with clients in several countries and have two bank accounts in two currencies. Recently, I sent out an invoice with the wrong bank account number, so a client invoiced in SGD made a payment into the EUR account.

Long story short, how do I sort out the accounting? I have separate Accounts Receivable for the two currencies, and my accounting program (GnuCash) balks at trying to credit an AR-SGD payment into the EUR account.

Currently I'm planning to transfer the money from EUR to SGD and process the payment as if it had been made directly into the SGD account, but I'm not sure how to deal with the money that magically appears and disappears briefly in the EUR account. "Nothing" would be the easiest solution, but that would look pretty strange in an audit...

Answer 1

If you're audited routinely you probably have an accountant to get this straight.

It's not something that I would be too worried about as it is purely journal-entry issue, there's no problem with the actual money. Mistakes happen. I'd suggest converting the currency, taking loss/gain on the conversion as a capital loss/gain, and credit the correct currency to the correct account. If GnuCash causes problems - just record it in the EUR equivalent, putting in notes the actual SGD value.

Note that I'm not an accountant and this is not a professional advice.