Lc journal entries
This query is : Resolved
30 March 2014
Hi all , Please guide me for the journal entries of Letter of Credit in books of Purchaser
1) On opening/requesting LC
2) On receiving goods
3) On payment by bank and on receiving advice
4) On payment to bank say after 90 days
Its Urgent Please…
1) On opening/requesting LC
2) On receiving goods
3) On payment by bank and on receiving advice
4) On payment to bank say after 90 days
Its Urgent Please…
30 March 2014
on issue of LC
LC Margin A/c
To Bank A/c
On receiving goods
Purchases A/c
To Supplier A/c
On payment
Supplier A/c
To bank A/c
For LC Charges
LC Charges/Commission A/c
To Bank A/c
For reversal of margin
Bank A/c
To LC Margin A/c
If the payment is made after the LC due date, Bank will levy penalty, so make entry for that too
LC Margin A/c
To Bank A/c
On receiving goods
Purchases A/c
To Supplier A/c
On payment
Supplier A/c
To bank A/c
For LC Charges
LC Charges/Commission A/c
To Bank A/c
For reversal of margin
Bank A/c
To LC Margin A/c
If the payment is made after the LC due date, Bank will levy penalty, so make entry for that too
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29 July 2016
Journal Entries For Letter of Credit
Commonly Known As : L C
Letter of Credit: Letter of Credit is a credit letter from bank assuring/guaranteeing of business transaction where a buyer and a seller not known each other. Buyer payment to a seller will be clear on time in specified currency with specified amount subject to fulfill defined conditions of letter of credit.
Journal Entries:-
(1) Entry for opening of LC
L.C. Margin A/c Dr.
To Bank A/c
(Being ..% margin part to bank against LC of Rs. …………)
(2) Payment of Commission/LC Charges
L.C. Charges /Commission A/c Dr.
To Bank A/c
(Being LC Commission and Charges Paid against LC No. ….of Rs. .)
(3) Purchase of Goods
Purchase A/c Dr.
To Party (Creditor) A/c
(Being goods purchased against letter of LC No. ….)
(4) Entry for realization of LC
Party (Creditor) A/c Dr.
To Letter of credit A/c
(Being LC forwarded to buyer’s LC No. …..)
(5) Payment of LC
Letter of Credit Dr
To LC Margin A/c
To Bank A/c
(6) In Case of devolvement of LC
Letter of Credit Devolved A/c
To Letter of Credit
To L C Margin A/c
(Being LC no .. of Rs. devolved and margin adjusted by bank)
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Commonly Known As : L C
Letter of Credit: Letter of Credit is a credit letter from bank assuring/guaranteeing of business transaction where a buyer and a seller not known each other. Buyer payment to a seller will be clear on time in specified currency with specified amount subject to fulfill defined conditions of letter of credit.
Journal Entries:-
(1) Entry for opening of LC
L.C. Margin A/c Dr.
To Bank A/c
(Being ..% margin part to bank against LC of Rs. …………)
(2) Payment of Commission/LC Charges
L.C. Charges /Commission A/c Dr.
To Bank A/c
(Being LC Commission and Charges Paid against LC No. ….of Rs. .)
(3) Purchase of Goods
Purchase A/c Dr.
To Party (Creditor) A/c
(Being goods purchased against letter of LC No. ….)
(4) Entry for realization of LC
Party (Creditor) A/c Dr.
To Letter of credit A/c
(Being LC forwarded to buyer’s LC No. …..)
(5) Payment of LC
Letter of Credit Dr
To LC Margin A/c
To Bank A/c
(6) In Case of devolvement of LC
Letter of Credit Devolved A/c
To Letter of Credit
To L C Margin A/c
(Being LC no .. of Rs. devolved and margin adjusted by bank)
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