Packing Credit and LC accounting

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Bharath Kumar

Bharath Kumar (Querist)
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12 July 2010 Please explain the accounting procedure involved in PC and LC

CA SMR

CA SMR (Expert)
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13 July 2010 The following examples are hypothetical.I am keeping this query open for further opinion.
Accounting for LC
On opening an LC amounting to Rs 1000/-in favour of a 3rd party with the bank :
a) Margin Money Deposit Dr 250
To Bank 250
On Maturity of LC

b) Bank Dr 275
To Margin Money deposit 250
To Interest on Margin Money Deposit 25

c) Sundry Creditor Dr 1000
BAnk Charges/Interest Dr 120
To Bank 1120

Packing Credit
This is a term loan.In my opinion entry will be debit bank account and credit Loan Account.

Bharath Kumar

Bharath Kumar (Querist)
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15 July 2010 Expecting revert from other experts also

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