Owing to the fluctuations of the foreign exchanges, foreign bills have been drawn of late for the most part in dollars. If an advance is made on a bill which is drawn in foreign currency, the customer is either given a percentage of the converted value or the exact amount of the converted value, depending upon his credit standing and that of the drawee abroad. The ledger for foreign bills purchased is much the same in principle as the one illustrated under foreign exchange purchased and sold. Briefly, there are on both debit and credit sides foreign amount (or dollar face) and dollar cost columns; the profit is computed by deducting the dollar cost of a bill from the amount of the proceeds in dollars, the proceeds being increased by the interest charge made against the American customer for the time which has elapsed between the extension of the dollar credit to him for the bill and the receipt by the bank of the proceeds. Thus if a bill cost $25,000 and the bank collected, including interest, $25,200, its gross profit on it would be $200. This illustration covers bills drawn in dollars only. The classification of accounts in the foreign bills ledgers is ordinarily by country to which sent. Whether the bills are drawn in dollars or foreign currency does not matter so far as bookkeeping is concerned. The bank general ledger debits and credits covering advances on foreign bills are as follows:

Debit: Advances on Foreign Bills Credit: Cashier's Checks

The term "advances on foreign bills" is better than the phrase "foreign bills purchased" because no bank buys outright a customer's bill, but always takes it subject to charge back if the bill is not paid by the drawee abroad.