what are the transactional entries have to be passed in
Letter of credit
Answer Posted / ameet narayankhedkar
he issuer of the letter of credit is the financial
institution that issues the letter of credit. Said financial
institution records the letter of credit as being a
contingent liability, meaning that it makes no entry for the
document until it has been exercised. Instead, the financial
institution must disclose in a footnote that it has such
documents outstanding. Once exercised, the entry for them is
an increase to expenses and either a decrease to the
issuer's cash account or the occurrence of a payable on its
part depending on its payment method.
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Alex’s Trial Balance at 31 December 2015 Dr (BWP) Cr (BWP) Capital 18 240 Bank overdraft 3 000 Fixtures and fittings 14 100 Provision for depreciation-fixtures and fittings 8 800 Inventory 14 200 Trade receivables 12 300 Trade payables 9 900 Revenue 110 000 Purchases 51 000 Discount received 1 800 Wages and salaries 26 000 Sundry expenses 34 000 Discount allowed 620 217 540 ======= 86 420 ======== Required: i Prepare the corrected trial balance at 31 December 2015. (7 marks) ii Show any difference you find as a balance on an appropriate account.