please tell me in written the first day entry of letter of credit how it,s accounts maintain and tell me if purchaser give 25% advance to bank and 75% after 3 months this time will start when we receive goods. after receive goods the entry and when we wll make payment what are the entries and how can i mannage through these entries in lc accounts which is in our chart of accounts.
1 Replies
V P Narasimhan
(Accounts Manager)
(791 Points)
Replied 25 June 2011
The L/C is another Credit faciity extended by Bank . So, we can route all the entries thro' Debtor's account.
The advance paid by the customer can be treated in Debtor's a/c or in Advance account and pass the journal entry at the time of full amount realised thro' L/C.
As the payment is assured after 3 months the 75% outstanding can be shown in the customer's Ledger.
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