Account for Letter of Credit in the Books

1-Debit the account of the applicant with us and credit the bank of the beneficarywith the equal money
2-Debit applicant account with us and credit the suspense account with us when the applicant pay for us.

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Once the material received the general entry will be

Purchase A/c Dr XXXX
To Supplier (Creditor) A/c Cr XXXXX

When the L/C is opened the entry should be

Supplier (Creditor) A/C Dr XXXXX
To Supplier L/C A/c Cr XXXXXX

When the payment made on the due date

Supplier L/C A/c Dr XXXX
Bank Cr XXXXXX

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