How to Record Back-to-Back LC Charges
Records the bank service charges for issuing a secondary letter of credit backed by an original incoming letter of credit.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Letter of Credit Fees | Expense | 750.00 | - |
| Cash at Bank | Asset | - | 750.00 |
💡 Accountant's Note
Banks charge fees for the administrative processing and risk assessment involved in issuing a back-to-back LC to a second-tier supplier.
Practitioner & Systems Framework
💻 ERP Architecture
Allocate to the specific trade finance project or purchase order cost center.
⚠️ Audit Flags
Verification of matching terms between the master LC and the back-to-back LC.
📄 Required Documentation
Bank debit advice and copy of the back-to-back LC agreement.
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Discussion & Community Questions
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