06-21-2016, 12:50 AM
Asalam Alaikum All!
This is my first post on the forum and happy to have joined.
I have been searching for Letter of Credit/Guarantee journal entries all over the internet but couldn't find anything. So I am posting my question here.
Our company trades in goods and we sell on credit, for which our customers open Letter of Credit in our favour through local banks. What would be the required journal entry, when we receive advice from our bank that XYZ has opened LC in our favour?
Likewise, we also open Letter of Credit for our suppliers (locally). The bank requires us to hold that amount of LC with the bank and we cannot use it until the LC is expired. What would be the required journal entry, when we open letter of credit in our supplier's favour?
On contracting side, we issue Letter of Guarantee to our clients, for whom we are doing projects. Likewise, the bank requires us the hold the full amount with the bank for the duration of Letter of Guarantee. What would be the required journal entry, when we open letter of guarantees in client's favour?
Thank you very much for your kind support.
Best Regards and Ramadan Kareem
This is my first post on the forum and happy to have joined.
I have been searching for Letter of Credit/Guarantee journal entries all over the internet but couldn't find anything. So I am posting my question here.
Our company trades in goods and we sell on credit, for which our customers open Letter of Credit in our favour through local banks. What would be the required journal entry, when we receive advice from our bank that XYZ has opened LC in our favour?
Likewise, we also open Letter of Credit for our suppliers (locally). The bank requires us to hold that amount of LC with the bank and we cannot use it until the LC is expired. What would be the required journal entry, when we open letter of credit in our supplier's favour?
On contracting side, we issue Letter of Guarantee to our clients, for whom we are doing projects. Likewise, the bank requires us the hold the full amount with the bank for the duration of Letter of Guarantee. What would be the required journal entry, when we open letter of guarantees in client's favour?
Thank you very much for your kind support.
Best Regards and Ramadan Kareem