Transferring money between two of the company’s bank accounts
Transaction
An importer transfers {amount} from its euro current account to its US dollar current account at the same bank, to pay an American supplier next month. The bank converts the euros at the day’s exchange rate and credits the dollars the same day.
Assumptions: The bank charges no fee and no exchange margin: the dollars received are worth exactly the euros paid on the day of the transfer.
No equivalent in this convention
In US textbooks the Cash account includes the balances of all the company’s bank accounts, in any currency, so a transfer between two of its own accounts changes no account balance and needs no journal entry.
Choose another convention above to practice this entry.