How to Record LC Overdrawing Settlement
Records the payment for the portion of a trade shipment that exceeds the original Letter of Credit value, often due to weight or quantity tolerances.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Accounts Payable - Supplier | Debit | 2,000.00 | - |
| Cash or Bank | Credit | - | 2,000.00 |
💡 Accountant's Note
If an LC is overdrawn within allowed tolerances (e.g., 5% more goods shipped), the excess amount must be settled directly or through an amended bank instruction.
Practitioner & Systems Framework
💻 ERP Architecture
Manual adjustment to the LC liability account or a direct vendor payment.
⚠️ Audit Flags
Discrepancy between LC face value and final commercial invoice/payment.
📄 Required Documentation
Commercial invoice, packing list showing excess quantity, and bank debit note.
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Discussion & Community Questions
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