Accounting entries for letter of credit transactions

I guess you are asking from the issuing bank's perspective. The issuing bank will not account for LCs in its books. It is required to be disclosed in the balance sheet as contingent liability.

friend please do provide from whose perspective you want to have accounting entries.

I m not understand pease mentioned clearly

Yes there are no entry made on receipt of any Letter of Credit.

But if  you are a  buyer, using LC to purchase any material from outside country then you can make entry in your books. These entries does not effect to the books of account. That is for controlling  the limit of bank. You can maintain two ledger account where you debit and credit6 both the account as and when the transaction happen. It may helpful for you to control the LC limit with your bank. Otherwise there are no other entries for LC.

>> Rajesh

so as a buyer, we do not need to do any entries? DR Vendor CR Bank will suffice?

Would anyone please tell me What are the areas to be verified for an audit of Letter of credit transactions from a buyers perspective

thank you