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journal entry of LC

CA Bhuvan (CA ) (83 Points)

15 May 2010

Plz tell me how to do the journal entry of letter of credit. what entry should be passed when amount received from bank against letter of credit. its urgent.

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5 Replies

DIVYA MITTAL (AUDIT ACCOUNTS&TAX EXECUTIVE) (67 Points)
Replied 15 May 2010

If you sold goods to party

Entry is

Party A/c DR.

TO sales

after that you have recd money from bank against letter of credit

then entry is

bank a/c dr.

to party

there is no matter co. recd money from party directly/indirectly through letter of credit, Entry will be same

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CA Bhuvan (CA ) (83 Points)
Replied 15 May 2010

did bank charges any amount for giving amt. against letter of credit. I am little confused about the concept of letter of credit. plz explain it .

Numia (Accounting Software Developer) (25 Points)
Replied 05 July 2010

Enter the following

Letter of credit(LC) Commission expense in Debit $XXX (amt)
Purchases / Stock / Inventory in Debit -$XXX
Vendor in Credit - $XXX
Bank in Credit -$XXX
LC margin with the Bank - ( Advances) - Credit -$ XXX

KRISHNAMOORTHI.V (clerk) (41 Points)
Replied 07 July 2010

Originally posted by : Numia
	Enter the following Letter of credit(LC) Commission expense in Debit $XXX (amt) Purchases / Stock / Inventory in Debit -$XXX Vendor in Credit - $XXX Bank in Credit -$XXX LC margin with the Bank - ( Advances) - Credit -$ XXX