Accounting Entries for Letter of Credit Payments

When a payment is made with the letter of credit payment method, post accounting entries to the line of credit account. This should only be done when the payment has a post status of U (unposted) and a payment method of LC (letter of credit).

Action: Voucher Entered and Posted

GL Business Unit

Distribution Account Type

Foreign Amount

Foreign Currency

Monetary Amount

Currency Code

DEU01

Expense Distribution

10000

EUR

10000

EUR

DEU01

Accounts Payable

(10000)

EUR

(10000)

EUR

Action: Payment Entered and Posted, Discount Not Taken

The system credits the letter of credit account instead of the cash account.

GL Business Unit

Distribution Account Type

Foreign Amount

Foreign Currency

Monetary Amount

Currency Code

DEU01

Accounts Payable

10000

EUR

10000

EUR

DEU01

Letter of Credit

(10000)

EUR

(10000)

EUR

Action: Payment Entered and Posted, Discount Taken.

When a discount is taken, the system subtracts the discount amount from the letter of credit amount and posts the difference to the discount earned account.

GL Business Unit

Distribution Account Type

Foreign Amount

Foreign Currency

Monetary Amount

Currency Code

Calculation

DEU01

Accounts Payable

10000

EUR

10000

EUR

 

DEU01

Letter of Credit

(9800)

EUR

(9800)

EUR

10000 - (10000 * .02)

DEU01

Discount Earned

(200)

EUR

(200)

EUR

10000 * .02