Process Of Letter of Credit for Imports

[Former Member]

Dear all,

Any one tell me process Of Letter of Credit for Imports ?

which transaction code can I use to post accounting entries ? which step to configure ?

step by step

Thank in advance

Minhtb

Edited by: Tran Binh Minh on May 8, 2008 5:44 AM

[Former Member]

Hi Tran,

Letter of Credit, has to be configured as a Noted item,as it would have no financial impact.

You need to configure it as Special GL indicator using T Code FBKP and assign the Gl account.

Once you have done the configuration,for posting you use the T Code F-57(Accounts Payable).

The amount so entered would be shown as a open item as long as a it is not being paid.

At the time of Payment in the Open Item selection field you need to specify the special GL indicator L. Then it would be cleared.

Hope I have given you the required information. Feel free to revert back if you have any more doubts.

Regards

Phani

[Former Member]

Hi Phani

Thank for your help

Please tell me step by step from creating a letter of credit to paying

I have a business below:

1. The Clearing agent ask for amount, the person who receive the product will give Letter of Authority to Clearing Agent. The clearing agent move to bank and take check.

For this purpose, we just issue LA.

2. Prepare Purchase for the Vendor from whom we are going to receive the product. There may be 2 or more Vendors.

1. Product cost to be transferred to Vendor A

2. Freight or Other Charges to Vendor B

3. Customs Duty and Others to Vendor C

3. First We have to pay Customs Duty to Commissioner of Customs after LA issued.

Entry : Customs Clearing a/c Dr

Cess on Custom a/c Dr

CVD Clearing a/c Dr

Cess on CVD a/c Dr

Special CVD a/c Dr

Vendor C a/c Cr.

4. Cenvat credit for the product will be taken by person who handling Excise in that company

Entry : Cenvat Clearing a/c Cr.

RG23A Part II a/c Dr.

5. Clearing of Cenvat Credit

Entry : Cenvat Clearing a/c Dr.

CVD clearing a/c Cr.

Cess on CVD a/c Cr.

Special CVD a/c Cr.

6. After Bank payment they will transfter to us

Entry : Vendor a/c - Dr.

Bank a/c - Cr.

Please tell me how to configure and post accounting entries

Step by step

Thank you very much

Minh

[Former Member]

Hi Minh,

I feel what you are asking is two different aspects.

1. Purchase Cycle involving Taxes,Customs Duty and other Statutory Payments &

2.Payment to Vendor.

With regard to the entries relating to Taxes, the Accounting Entries would be generated when we activate the Taxes on Sales & Purchases (CIN for India )i.e by defining and assigning the Procedure to the country and creating the Tax codes in FTXP and assigning the GL accounts for the flow of Tax amounts and the set off between input Tax and output tax.

In case of Letter of Credit, once we issue the letter of credit to the vendor for the purchse of goods then we would enter the same through F-57i.e Noted item Account Payable, as this is only for information without any financial impact.

At the time of making payment by our bank we would clear this by entering the Special GL Transaction L, so that it would select and clear the noted item.

Hope I have given the information required you.

Still if you have anay doubts feel free to ask me.

Regards

Phani

[Former Member]

Hi Phani

Thank for your help

At the time of making payment by our bank we would clear this by entering the Special GL Transaction L, so that it would select and clear the noted item.

Please tell me how to configure Special GL Transaction L and how to clear the noted item (Accounting process)

Regards

Minh

Edited by: Tran Binh Minh on May 8, 2008 9:20 AM

[Former Member]

Hi Minh,

The Special GL indicator L has to be configured using the T Code FBKP

Click on Spl Gl Indicator L, and enter the chart of accounts

Provide the Recon Account, that has been provided in the Vendor Master and Special GL Acct.

When the Letter of Credit is being entered using F-57 the data is being entered in the GL account that is being assigned in the Special GL indicator column.

When the payment is being made then the Speciala GL indicator L is being selected Open Item selection area.

Hope I have provided the required information

Regards

Phani