Account Used in Import

A Summary
Dr. Hulya Yilmaz
Letter of Credit
• In this payment method
1. Cost of Letter
2. Payment (Cost of Goods)
3. Import (Inventory)
 Letter of Credit
Cost of Letter
• In this method we start with taking a letter of credit from our bank.
• When we make an advance payment for our domestic and
international purchase, we debit Advances to Given to Suppliers
Account, account number 159.
• When we make a payment we use banks account, account number
102. (we credit this accounts)
 Letter of Credit
Cost of Letter

DESCRIPTION DEBIT CREDIT

159 Advances Given to Suppliers
159.02 Import Advances
159.02.50 Cost of letter of credit

102 Banks

Cost of letter of credit

 Letter of Credit
Payment
• In letter of credit, payment is made before import (first you pay the
money then the goods come).
• We debit Advances Given to Suppliers Account, account number 159
because this is a payment we make in advance to our supplier.
• We credit our banks account when we make a payment in advance.
 Letter of Credit
Payment

DESCRIPTION DEBIT CREDIT

159 Advances Given to Suppliers
159.02 Import Advances
159.02.10 Cost of Goods

102 Banks

Payment for Cost of Good

 Letter of Credit
Import
• After we make the payment for cost of goods, we receive the goods from
customs, clear them, and take them into our inventory.
• When we clear imported goods from customs, we debit them to Trade Goods
Account, account number 153 with their costs.
• When the imported goods arrive at customs, we pay value added tax (VAT) to
the customs for the cost of goods. We debit this account for the value added
taxes that are paid in the purchase of goods
• We credit Advances Given to Suppliers Account, account number 159, when
we receive the purchased goods and take them into our inventory
• We can credit our banks account for the payments that we make at customs,
payment like VAT
 Letter of Credit
Import
DESCRIPTION DEBIT CREDIT
153 Trade Goods
191 Deductible VAT

159 Advances Given to Supplier

159.02 Import Advances
159.02.10 Cost of Letter of Credit
159.02.50 Cost of Good
102 Banks

Import
Bill of Exchange
• In this payment method
• Payment (Cost of Goods)
• Import (Inventory)
 Bill of Exchange
Payment
• We debit Advances Given to Suppliers Account, account number 159
because this is a payment we make in advance to our supplier.
• We credit our banks account when we make a payment in advance.
 Bill of Exchange
Payment

DESCRIPTION DEBIT CREDIT

159 Advances Given to Suppliers
159.02 Import Advances
159.02.10 Cost of Goods

102 Banks

Payment for Cost of Good

 Bill of Exchange
Import
• After we make the payment for cost of goods, we receive the goods from
customs, clear them, and take them into our inventory.
• When we clear imported goods from customs, we debit them to Trade Goods
Account, account number 153 with their costs.
• When the imported goods arrive at customs, we pay value added tax (VAT) to
the customs for the cost of goods. We debit this account for the value added
taxes that are paid in the purchase of goods
• We credit Advances Given to Suppliers Account, account number 159, when
we receive the purchased goods and take them into our inventory
• We can credit our banks account for the payments that we make at customs,
payment like VAT
 Bill of Exchange
Import
DESCRIPTION DEBIT CREDIT
153 Trade Goods
191 Deductible VAT

159 Advances Given to Supplier

159.02 Import Advances
159.02.10 Cost of Letter of Credit
159.02.50 Cost of Good
102 Banks

Import
 Cash in Advance
• In this payment method
• Payment (Cost of Goods)
• Import (Inventory)
 Cash in Advance
Payment
• In this phase, everything is the same as in letter of credit and bill of
Exchange.
• We debit Advances Given to Suppliers Account, account number 159
because this is a payment we make in advance to our supplier.
• We credit our banks account when we make a payment in advance.
 Cash in Advance
Payment

DESCRIPTION DEBIT CREDIT

159 Advances Given to Suppliers
159.02 Import Advances
159.02.10 Cost of Goods

102 Banks

Payment for Cost of Good

 Cash in Advance
Import
• After we make the payment for cost of goods, we receive the goods from
customs, clear them, and take them into our inventory.
• When we clear imported goods from customs, we debit them to Trade Goods
Account, account number 153 with their costs.
• When the imported goods arrive at customs, we pay value added tax (VAT) to
the customs for the cost of goods. We debit this account for the value added
taxes that are paid in the purchase of goods
• We credit Advances Given to Suppliers Account, account number 159, when
we receive the purchased goods and take them into our inventory
• We can credit our banks account for the payments that we make at customs,
payment like VAT
 Cash in Advance
Import
DESCRIPTION DEBIT CREDIT
153 Trade Goods
191 Deductible VAT

159 Advances Given to Supplier

159.02 Import Advances
159.02.10 Cost of Letter of Credit
159.02.50 Cost of Good
102 Banks

Import
 Cash Against Goods
• In this method, transaction flow is as follow:
• Import
• Payment
 Cash Against Good
Import
• In cash against goods, we receive goods first. When clear the items
from customs,
• We debit them in Traded Goods Account, account 153.
• We debit Deductible VAT Account for all VAT payments
• In cash against good, when we receive the items from the customs
and put them into our inventory, we credit our Suppliers Account,
account number 320.
• We also credit Banks Account, account number 102
 Cash Against Good
Import
DESCRIPTION DEBIT CREDIT

153 Traded Goods

191 Deductible VAT

320 Suppliers
102 Banks

Import
• In cash against goods, payment is made after import is completed.
• We debit Suppliers Account, account number 320.
• We make the payment from our bank account, account number 102.
 Cash Against Good
Payment
DESCRIPTION DEBIT CREDIT

320 Suppliers

102 Banks

Payment (Cost of Good)

Costs Other than Cost of
Goods in Import
 In all kinds of import transaction,
regardless of payment method, costs
other than cost of goods are recorded in
similar ways.
 Foreign Exchange Losses or Gains
• 646 Foreign Exchange Gains
• When such a gain arises, it is credited to 646
• 656 Foreign Exchange Losses
• When such a loss arises, it is debited to 656
 Foreign Exchange Gains

• For gains, we use Foreign Exchange Gains Account, account number

646. When a gain arises, it is credited to the 646.

• We can also reflect foreign exchange gains under Advances to Given

to Suppliers Account, account number 159. Foreign Exchange Gains
are credited to 159 account.
 Foreign Exchange Gains
DESCRIPTION DEBIT CREDIT

102 Banks

646 Foreign Exchange Gain

646.01 Exchange Differences

Exchange Gain
 Foreign Exchange Gains

DESCRIPTION DEBIT CREDIT

102 Banks

159 Advances Given to Suppliers

159.02 Foreign Sellers
159.02.001 Company B
159.02.001.02 Exchange Rates Gain

Exchange Rate Gain

 Foreign Exchange Loss
• Foreign Exchange losses are debited to Foreign Exchange Loss,
account number 656.

• We can also debit foreign Exchange losses under Advances to Given to

Suppliers Account, account number 159.
 Foreign Exchange Loss

DESCRIPTION DEBIT CREDIT

656 Foreign Exchange Loss

656.01 Exchange Differences

102 Banks

Exchange Loss
 Exchange Rate Loss

DESCRIPTION DEBIT CREDIT

159 Advances Given to Suppliers

159.02 Foreign Sellers

159.02.001 Company B
159.02.001.02 Exchange Rates Loss

102 Banks

Exchange Rate Loss

 Stamp Duty

DESCRIPTION DEBIT CREDIT

159 Advances Given to Suppliers

159.02 Foreign Sellers
159.02.001 Company B
159.02.001.04 Stamp Duty

102 Banks

Stamp Duty
 Cost of Customs Broker

DESCRIPTION DEBIT CREDIT

159 Advances Given to Suppliers

159.02 Foreign Sellers

159.02.001 Company B
159.02.001.05 Custom Broker

102 Banks

Service Cost of Customs Broker

 Entrepot Cost

DESCRIPTION DEBIT CREDIT

159 Advances Given to Suppliers

159.02 Foreign Sellers

159.02.001 Company B
159.02.001.06 Entrepot Cost

102 Banks

Entrepot Cost
 Internal Transportation Cost

DESCRIPTION DEBIT CREDIT

159 Advances Given to Suppliers

159.02 Foreign Sellers

159.02.001 Company B
159.02.001.07 Transportation Cost

102 Banks

Internal Transportation Cost

 Customs Tax

DESCRIPTION DEBIT CREDIT

159 Advances Given to Suppliers
159.01 Import Advances
159.01.001 Customs Tax

102 Banks

Custom Tax