This document outlines the key accounting entries and disclosures required for availing and accounting for buyer's credit in the books of an importer. It provides journal entries for purchasing goods on credit, payment to supplier, availing letter of credit or buyer's credit against documents, rollover of buyer's credit, payment of buyer's credit, withholding tax deductions, foreign exchange fluctuations, letter of credit and buyer's credit charges. It also discusses disclosure requirements in the balance sheet as per revised Schedule III, classifying buyer's credit as long term or short term borrowing based on period, and expense and income heads in the profit and loss statement.
This document outlines the key accounting entries and disclosures required for availing and accounting for buyer's credit in the books of an importer. It provides journal entries for purchasing goods on credit, payment to supplier, availing letter of credit or buyer's credit against documents, rollover of buyer's credit, payment of buyer's credit, withholding tax deductions, foreign exchange fluctuations, letter of credit and buyer's credit charges. It also discusses disclosure requirements in the balance sheet as per revised Schedule III, classifying buyer's credit as long term or short term borrowing based on period, and expense and income heads in the profit and loss statement.
This document outlines the key accounting entries and disclosures required for availing and accounting for buyer's credit in the books of an importer. It provides journal entries for purchasing goods on credit, payment to supplier, availing letter of credit or buyer's credit against documents, rollover of buyer's credit, payment of buyer's credit, withholding tax deductions, foreign exchange fluctuations, letter of credit and buyer's credit charges. It also discusses disclosure requirements in the balance sheet as per revised Schedule III, classifying buyer's credit as long term or short term borrowing based on period, and expense and income heads in the profit and loss statement.
To Avail Buyers / Suppliers Credit: E: sanjaymandavia@gmail.com, : !"#"$%&&'(#$' Buyers Credit Essential Accounting Entries, Classification and Disclosures in Books of Accounts: T)e *ollo+ing ,ournal Entries are to -e passed in t)e -oo.s o* /mporter: 1. When raw material is purchased on credit 0urc)ases A/c 1r 222222 To 0arty A/c Cr 222222 . When payment is made on our !ehalf to party 0arty A/c 1r 222222 To Ban. A/c Cr 222222 ". When Buyers Credit is a#ailed against $C 3etter o* Credit 4name o* -an.5 A/c 1r 222222 To Buyers credit 4name o* -an.5 A/c Cr 222222 %. When Buyers Credit is a#ailed against Document at sight 0arty A/c 1r 222222 To Buyers credit 4name o* -an.5 A/c Cr 222222 &. When Buyers Credit rollo#er Buyers credit 4name o* -an.5 A/c 1r 222222 To Buyers credit 4name o* -an.5 A/c Cr 222222 '. When Buyers Credit is paid !ack Buyers credit 4name o* -an.5 A/c 1r 222222 Ban. /nterest A/c 1r 222222 To Ban. A/c Cr 222222 (. When Withholding )a* is deducted and paid + in cases where !uyers credit is a#ailed from ,oreign Banks where W-) is applica!le. Ban. /nterest A/c 1r 222222 To T1S 0aya-le A/c Cr 222222 4+)en +it))olding ta2 payment accrues5 T1S 0aya-le A/c 1r 222222 To Ban. A/c Cr 222222 4+)en +it))olding ta2 is paid to t)e department t)roug) T1S c)allan5 /. When due to ,oreign Currency ,luctuation income or loss is !ooked +)en gain is -oo.ed 0arty A/c 1r 222222 To 6ain due to 7oreign Currency 7luctuation A/c Cr 222222 +)en loss is -oo.ed 3oss due to 7oreign Currency 7luctuation A/c 1r 222222 To 0arty A/c Cr 222222 0. When $C issuance charges taken !y !ank 3C issuance c)arges A/c 1r 222222 To Ban. account Cr 222222 11. When $o2 issuance charges taken !y !ank 3o8 issuance c)arges A/c 1r 222222 To Ban. account Cr 222222 11. When Buyers Credit Commission charges taken !y !ank Ban. Commission A/c 1r 222222 To Ban. account Cr 222222 1. When )erm $oan 3nterest is paid to !ank Ban. 4Term 3oan5 /nterest A/c 1r 222222 To Ban. Account Cr 222222 Disclosure in Balance 4heet as per 5re 6 re#ised 4chedule 73 +which is applica!le till "1st 8arch, 111. Buyers Credit, Suppliers Credit and 8npaid 3C s)all -e classi*ied and disclosed under t)e su-9 )ead 9$oans and ad#ances from !anks: under t)e :ead o* 94ecured $oans: under 4ources of ,unds in t)e -alance s)eet o* t)e company as per t)e re;uirements o* Sc)edule </ to t)e Companies Act, #"&'. Disclosure in Balance 4heet as per ;e#ised 4chedule 73 Buyers Credit, Suppliers Credit and 8npaid 3C ta.en *or more t)an # year s)all -e disclosed under t)e su-9)ead 93ong Term Borro+ings: under t)e :ead o* 9<on Current $ia!ilities: under E=uity and $ia!ilities. =)ereas Buyers Credit Suppliers Credit and 8npaid 3C ta.en *or less t)an # year s)all -e disclosed under t)e su-9)ead 9S)ort Term Borro+ings: under t)e :ead o* 9Current $ia!ilities: under E=uity and $ia!ilities. Disclosure in 5rofit and $oss 4tatement 3C issuance c)arges, 3o8 issuance c)arges, Ban. Commission are considered as e2penses as Ban. C)arges and Ban. /nterest is disclosed under t)e )ead o* ,inance Cost. 6ain due to Currency 7luctuation is considered as income as E2c)ange 6ain and disclosed under t)e )ead o* >ther 3ncome.