Buyers Credit Accounting

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Mayank Singhvi

Mayank Singhvi (Querist)
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09 January 2011 Can anyone tell me the accounting of Buyers Credit????

Ram Avtar Singh

Ram Avtar Singh (Expert)
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09 January 2011 Buyer Credit is a credit facility provided by an Indian Bank or Lending Institution to the overseas buyer (Importer) to purchase Goods or Machinery from Indian Exporter. Buyer Credit facility is extended for a specific period of time.

Buyer Credit facility ensures safety and security of the payment to be received by the Indian exporter and the buyer or importer can have an agreement with the Indian bank or lending institution to settle the credit within a stipulated period of time at mutually agreed rate of interest and other terms.

when money paid on our bahalf to party

Party A/c Debit xxxxxx
Buyers credit account Cr xxxxxx

When we pay back

Buyers credit Dr xxxxxxxx
Bankc Account Cr xxxxxxx

any charges taken by bank

Bank comm. Dr xxxxxx
Bank account Cr xxxxxxx

Bank interest Dr xxxxx
Bank account Cr xxxxx

when currency fluctuation

currency fuctutaion (Dr or credit)
Byers credit (debit or credit.)

Mayank Singhvi

Mayank Singhvi (Querist)
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10 January 2011 Thanks for the guidance but Sir, my case is:
A Co. purchase(imports) machinery from China from X Co.(in china)
INDIAN BANK makes an arrangement to pay to Exporter(X Co.) on behalf of A Co. through OVERSEAS BRANCH of the same Bank.
Indian Bank act as a Guarantor for A Co. in this case.
A Co. will pay to Indian Bank at the end or will convert it into Term Loan.
How A Co. will represent the entire transactions in its books of Account???

Ram Avtar Singh

Ram Avtar Singh (Expert)
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10 January 2011 Term loan account will take place of buyers credit. nothing new.

Mayank Singhvi

Mayank Singhvi (Querist)
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10 January 2011 THANKS SIR, BUT MY POINT IS HOW TO ACCOUNT FOR MACHINERY & BANK?????
IS IT LIKE THIS-
MACHINERY ACCOUNT DR...
TO BUYERS CREDIT ACCOUNT

AND ON PAYMENT-
BUYERS CREDIT ACCOUNT DR...
TO BANK ACCOUNT(INDIAN BRANCH)

UNTIL THEN BUYERS CREDIT ACCOUNT WILL BE SHOWN UNDER "SECURED LOANS HEAD" OF LIABILITY SIDE OF B/S.
PLEASE GUIDE...

Mayank Singhvi

Mayank Singhvi (Querist)
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11 January 2011 hello sir, pls reply

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