Currency gain or loss recognition at the sales return invoice


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Assume my base currency is USD and a sales invoice was created in GBP (100 GBP at ex rate of 1.2).
Therefore I've recorded, 120 DEBIT as Account receivable and 120 CREDIT as Trade sales (Revenue).

A month after, I have to create a sales return invoice against that sales invoice due to damage goods (Full). But by the time exchange rate of GBP increases from 1.2 to 1.3. Now, how am supposed to record the journal entry of sales return invoice. Is it

130 CREDIT as Account receivable and 130 DEBIT as Trade sales (Revenue) OR 120 CREDIT as Account receivable and 120 DEBIT as Trade sales (Revenue) ?
 
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kirby

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At 120, otherwise you will leave the difference on the books forever,
 

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