Letter of Credit Journal Entries (student needs help) | AccountingWEB

Letter of Credit Journal Entries (student needs help)

Hi all !


I searched google a lot but found mixed journal entries for Letter of Credit in the buyer's (importer's) books.

However, I will reiterate here what I found:


(1) When bank issues L/C:

L/C Margin...Dr. ------------------------>(Is this an asset account ??)

Bank Account...Cr


(2) When L/C is realised, the bank charges its commission:

L/C Commission/Charges...Dr




L/C Margin..Cr.


Are the above journal entries correct ? And/or are there more journal entries than these ?


I would really appreciate your help in this regard.


Thank you



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