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title: "Letter of Credit and the General Ledger"
canonical: "https://kb.myframeworks.com.au/space/PROSTIXV48DOC/31101057/Letter%20of%20Credit%20and%20the%20General%20Ledger"
format: markdown
---
When stock is purchased from overseas, a bank issues a letter of credit with the currency conversion rate for that day. When the goods leave the vessel, this letter of credit is drawn upon. The stock then becomes your property. Once the vessel arrives, the goods are unloaded and eventually cleared by customs. This total process may and normally does take several weeks to complete, during which period there needs to be a record of the cost of goods in transit. A new General Ledger transaction entry has been added to accommodate the transaction and an extra General Ledger account is held in the Branch table for Stock In Transit. This new General Ledger transaction will prompt for basic details such as date, period, supplier, journal number, amount and a Letter of Credit reference. The program requires the Purchase Order number to be input. The Purchase Order will be updated with the Letter of Credit Reference No. When the stock is receipted, a check is made for a Letter of Credit reference number. If this exists, an adjustment transaction is made to the Stock in Transit General Ledger account, otherwise normal processing should take place. That is, DR Stock on Hand and CR Purchase Clearing. A report has been developed to report on the status of imported Purchase Orders.   A Letter of Credit and the General Ledger