Accounting for L/C and L/Gs

[Shunmas]

Hi All !

(1) Can an expert kindly help me with accounting entries for letter of credit and letter of guarantee ?

(2) What does "opening of L/C" mean ?

Thank you for your kind help.

 

[MikeJ]

The purchaser deposits money with the bank, who send you a letter of credit.

The money is released to you once you forward certain documents (typically the shipping documents).