please tell me for example we are importers and we open a lc with bank ,what is the opening entry of lc opening and how can i maintain lc accounts after purchase good .please tell me will i open lc account in my books as credit nature or debit nature.please also clear me what is bank guarantted letter or lc guarantee letter.
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letter of credit
Replies (1)
at the time of opening L/C for 1000 bank demand 20% margin and 80% bank guarantee
now entries
at the time of opening of LC
Margin to LC a/c dr ........200
to Bank A/c ..............................200
TDRa/c dr ( BG)......................80 (10% of 800)
to Bank A/c ....................................80
at the time of receipt of document at bank counter by vendor
Party A/c dr ...........................1000
To Bank A/c .....................................800
To Margin to L/C A/c .......................200
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Now the LC magin TDR is released and it would be kept for next L/C or get encashed with accured interest.
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