AR doesn't balance to GL for US accounts

Problem Details: 

Printing the AR Customer Aging does not equal the GL balance for the AR trade account for the US Receivables.  There are no entries that are posted in GL and not in AR, nor vice versa.  



Even if there are exactly the same transactions that go through AR and the GL, they sometimes will have different balances due to foreign exchange.  The AR Customer Aging report recalculates all of the outstanding transactions at the Fx rate at the date of the report.  This means that an invoice for $100 USD from February 3 converted at an exchange rate of 1.25 will post an entry in the GL of $125. Then the AR Customer Aging report is printed at February 28, and the exchange rate of 1.31 is used so the outstanding invoice is now valued in AR at $131 causing a $6 difference between AR and GL.  This is a kind of revaluation.

A couple of the options for dealing with these differences are:

  • Reconcile the AR and the GL in USD (the foreign currency) to ensure all transactions are accounted for and correct.  Leave the converted CAD amounts different based on differing foreign exchange rates.

  • After confirming that the only difference between the AR and GL is the foreign exchange, use the difference between the two as the revaluation entry and post it in the GL to bring the AR and GL into balance.  Reverse the revaluation entry on the first of the following period.   Since the outstanding AR will change from month to month, this revaluation needs to be done at the end of each month and reversed in the next period.  In our example above then, the entry in the GL at Feb 28 would be: DB unrealized fx gain/loss $6.00, CR accounts payables ($6.00).  On March 1, this entry would be reversed.  


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