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Letter of credit
How letter of credit utilization is captured in the balance sheet of the company. And how to pass the journal entry in the ledger
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There are 2 alternate for this transaction. Either you ignore the entry at the time of opening of LC and debit the party at the time of payment; OR alternatively whenever you receive the BOE debit to party and credit to an account which may called LC Payable A/c or BOE Payable a/c etc. Overall, there will be no difference in the liability of company.
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