QuickBooks Multi-Currency: Journal Entry Error Message

All transactions involving customers or vendors in QuickBooks Online must be recorded in the currency that is assigned to that customer or vendor in order to avoid seeing the following error message when working with multiple currencies: Not quite right about this: Only home currency A/R and A/P accounts can be used with home currency balance sheet accounts.

This means that the currency of the transactions, the A/R and A/P accounts, and the customers/vendors must all match when creating a journal entry that includes accounts receivable (A/R) or accounts payable (A/P).

Journal entries that mix currencies for customers or vendors are blocked by QuickBooks Online because they could result in incorrect open balances, exchange gains, or losses.

How the QuickBooks Journal Entries Problem Happened

All transactions for a customer or vendor must be recorded in the currency you assigned to that customer or vendor when using QuickBooks Online’s multi-currency functionality. This means that when you are entering accounts payable (A/P) or accounts receivable (A/R) in your journal, the vendors and customers, the A/R and A/P accounts, and the currency of the transaction all need to match.

Because mixed-currency journal entries for customers or vendors could result in inaccurate open balances for them or inaccurate exchange gains or losses in your accounting, QuickBooks Online now blocks them.

How to Find the Problem in QuickBooks Journal Entries

Invalid Journal Transactions is a new report in QuickBooks Online that only shows up if you have journal entries for customers or vendors that mix currencies. It’s under the Reports tab, under the “For my accountant” section.

We advise you to provide this article and the Invalid Journal Transactions report to your accountant if you work with one. If you don’t have an accountant, please follow the instructions below to fix the inaccurate journal entries. The Invalid Journal Transactions report will be empty once you are done.

How to Fix the Multi-Currency: Journal Entry Error Message

For every journal entry that mixes currencies for a customer or vendor, you have to:

• You have to create a backup copy of the problem journal entry.
  • To open it you have to select the journal entry in the Invalid Journal Transactions report.
  • Now you have to select Transaction Journal from the More button that is at the bottom right of the screen.
  • To customize it you have to select the Gear icon that is at the upper right of the report, when the Transaction Journal appears.
  • You have to select the Show More link from the customization window, then you have to select these checkboxes:
    • Customer
    • Vendor
    • Exchange Rate
    • Foreign Debit
    • Foreign Credit
    • Any other options you feel are useful.
  • You have to export it to Excel or print it by using the buttons on the top right of the Transaction Journal.
• Delete the problematic journal entry
  • To reopen the journal entry you just backed up, go back to the Invalid Journal Transactions report and select it.
  • Click the More button and choose Delete.

• One of the following methods should be used to replace the problematic journal entry:

Option 1 (Recommended)

Mostly, you can recreate the problematic journal entry with the same transaction currency, A/R or A/P currencies, and vendor or customer currencies. You might have to use the exchange rate from the removed journal entry to manually convert one currency to another in order to use this.

It is recommended to note the actual currency that you received in the Memo field of the journal entry.

Option 2

• Make a copy of the vendor or customer from the first journal entry, and give it the second currency you wish to use. For the duplicate, you will need to use a slightly different Display Name.
• For example, make a duplicate customer, assign it in EUR, and add a space-hyphen after the Display Name if your original customer was assigned CAD but wishes to pay you in EUR.

• Any open transactions that are in the first currency but should be in the second for the original vendor or customer are void
• To ensure that the transactions are in the correct currency, recreate them with the duplicate vendor or customer. To recreate these transactions, refer to your printout of the deleted journal entry for the exchange rate, amounts in home currency, and amounts in foreign currency.

Example- If your client paid you in USD even though you sent them an invoice in CAD, you would:

• Make a copy of the client in US dollars.
• Against the USD invoice, accept the customer’s USD payment.
• Void the customer’s CAD invoice.
• Recreate the invoice with the prices in USD using the customer’s copy in USD.

Option 3

If you are familiar with accounting, you can transfer a receivable or payable from one customer or vendor to another in a different currency by using a home-currency wash account and two journal entries.

• Create a bank account in your local currency that is empty for cash on hand. There shouldn’t be any money in this wash account-it will only be used for currency transfers.

For example, Make the wash account in USD, if that is the currency you are used to at home.

• Make a copy of the vendor or customer from the first journal entry, and give it the second currency you wish to use. For the duplicate, you will need to use a slightly different Display Name.

For example, make a duplicate customer, assign it in EUR, and add a space-hyphen after the Display Name if your original customer was assigned CAD but wishes to pay you in EUR.

• To move the receivable or payable from the original customer or supplier to the home-currency wash account, make the following journal entry:
  • Currency: The same amount of money was used by the original customer or vendor on your deleted journal entry.
  • Exchange Rate: It is the same as on your deleted journal entry.
  • Credit A/R or A/P: The same sum in the original customer’s or vendor’s currency as on your erased journal entry.
  • Debit Wash Account: The same amount in the original customer’s or vendor’s currency as on your deleted journal entry

• To transfer the receivable or payable from the wash account to the target custom or vendor in their currency, make a second journal entry:
  • Currency: The same currency as the target customer or vendor
  • Exchange Rate: In order to ensure that there is no money left in the wash account, it should be set so that the home currency value of this journal entry and the journal entry you created in Step 2 match. This is typically calculated by dividing the first journal entry’s home currency amount by the target currency amount. Note: There won’t be an exchange rate if your target currency and your home currency are the same (1:1).
  • Credit Wash Account: The target currency amount in the credit wash account
  • Debit A/R or A/P: Debit the desired amount in currency, A/R or A/P. Assign this line item to the target-currency duplicate vendor or customer.

• Apply the credit from the first journal entry to the original open transaction and close it with the original customer or vendor.

• The duplicate customer or vendor has now received the payable or receivable in the target currency.

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