Corporate practice bd |
Ans:
Export development fund (EDF):-
EDF stands for Export development fund (EDF) is a way to facilitate and support exporters to expand their business by granting loans a low-interest rate & also allowing more time I mean 180 days loan facility. To boost up the export sector Bangladesh's bank already formed a fund which is well-known as the Export development fund (EDF).
Who gets the EDF Loan facility in Bangladesh?
Any eligible customer who is already satisfied with the Bangladesh Bank in their terms and conditions may allow EDF loan facility through a Commercial bank. Exporter by providing Sight L/C or Sight BTB L/C (for importing/ procuring export input) payment at the premature stage of export, EDF provides the fund in foreign currency.
The Main features of EDF are as follows:-
01. It has to be repaid within 06 months .In case of overdue, the rate of interest will be charged @ commercial rate of interest.
02. The EDF facility is allowable by meeting at sight or BTB LC payment for importing Raw material.
03. The EDF liability is adjusted for the export proceed within six months.
04. In case of failure to repay the EDF loan, the loan to be adjusted by creating a SOD (Export) facility.
05. To provide law interest rate, facilitate import raw material.
06. Primary security: Deemed export L/C, Export L/C documents/bills.
07. All specific loans against EDF and each loan against EDF created under a revolving limit are demand loans by nature.
08. Loan must be provide foreign currency not BDT Amount
09. Loan is granted against Import raw materials, I mean it must be against import LC.
Let’s we start
Accounting treatment when we already get the EDF facility.
Say, for example,
ABC A 100% export-oriented group of a
company currently allows $560657.50 EDF
loan facility under ( EDF Loan no.248-17908) @ 85 within 180 days period of
repayment. as we can see there is import raw material LC number
-1205502350(IF) .LC Value $562280.50, LC Qty-350 MTS, LC Invoice
value$560657.50, invoice Qty was-350950kg or LBS-773704.37 (inst-2.2046 LBS =1kg)
but Actual QTY received by MRR NO.21-00252,21-00280 (material receiving report
by factory) =352350kg.
Additional
information,
1. LC Charge & commission .20% of LC
value TK. 89500.000
2. Bank chargeTk.15600.000
3. LC margin 5% of LC value@85 per
4. EDF created by Bank$560657.50@85 dt.15.12.2021
5. Insurance charge Tk.120500.000
6. C& F Bill received Tk.485000.000
7. Raw Material carrying bill Tk.444500.000
8. Bank confirmation charge Tk.96700.000
9. Loading expense Tk.8950.000
10. Unloading expense Tk.9630.000
11. At dated 20.01.2022 refund the 5% LC margin to the company’s
CD account say, for 532(SIBL).
Steps-01. (EDF Loan Creation- Journal Entry into the Tally)
Transit Raw material LC- 1205502350 debit Tk.4,76,55,888.000
To EDF Loan no.248-17908 (Raw material LC- 1205502350) credit Tk.47655888.000
Description:(EDF creation $560657.50@85 dt.15.11.2021)
Step-02.(LC Margin creation into the Tally)
Raw material LC- 1205502350MD debit Tk.23,89,692.000
To CD Account(if 10478) credit Tk.23,89,692.000
Description:( creation LC margin deposit(MD) (5%*562280.50)= 28114.025@85 dt.15.11.2021).
Step-03.(LC related expenses recorded into the Tally)
01.For LC charge & commission charge by bank (Bank payment voucher)
Transit Raw material LC- 1205502350 debit Tk.89,500.000
To CD Account(if 10590) credit Tk.89,500.000
Description:( To record LC charge& commission).
02. For Bank charge by bank (Bank payment voucher)
Transit Raw material LC- 1205502350 debit Tk.15,600.000
To CD Account(if 10590) credit Tk.15,600.000
Description:( To record Bank charge, by bank ).
03. For Insurance charge by (Bank payment voucher)
Transit Raw material LC- 1205502350 debit Tk.1,20,500.000
To CD Account(if 10590) credit Tk.1,20,500.000
Description:( To record Insurance charge, by bank ).
04. For C&F Bill charge by bank (Journal voucher)
Transit Raw material LC- 1205502350 debit Tk.4,85,000.000
To credit C&F agent Sundry creditor Tk.4,85,000.000
Description:( To record Provision for C& F Bill).
05. For Raw material carrying bill by (Journal voucher)
Transit Raw material LC- 1205502350 debit Tk.4,44,500.000
Carrier Agency sundry creditor Credit Tk.4,44,500.000
Description:( To record Provision for Raw cotton carrying Bill).
06 .LC confirmation charge by (Bank payment voucher)
Transit Raw material LC- 1205502350 debit Tk.96,700.000
To CD Account(if 10590) credit Tk.96,700.000
Description: (To record LC Confirmation charge by bank).
07.Raw material loading bill paid by (Factory petty cash) (Cash payment voucher)
Transit Raw material LC- 1205502350 debit Tk.8,950.000
To credit Cash in hand (FO)Tk.8,950.000
Description: (To record payment of Raw material loading bill).
08.Raw material unloading bill paid by (Factory petty cash) (Cash payment voucher)
Transit Raw material LC- 1205502350 debit Tk.9,630.000
To Credit Cash in hand (FO)Tk.9,630.000
Description: (To record payment of Raw material unloading bill).
09. Refund the 5% LC margin to the companies CD account say, for 532(SIBL)where bank already deducted by CD Account say, for 532(SIBL)
CD Account (if 10478) debit Tk. 23,89,692.000
Raw material LC- 1205502350MD Credit Tk.23,89,692.000
Description: (To record Refund of LC Margin where bank already deducted by CD Account say, for 532(SIBL now it is refunded).10.Final -steps For Raw Material purchase -Journal into the Tally
Purchase Raw Material Account Debit (all transit raw material)TK.4,89,26,268.000
(4,76,55,888+89,500+15,600+1,20,500+4,85,000+4,44,500+96,700+8,950+9,630)
To Transit Raw material LC- 1205502350 Credit TK.4,89,26,268.000
Description: (To record Purchase Raw material TK.4,89,26,268 /3,52,350kg.)=138.8570(per kg) MRR NO.21-00252,21-00280
Let’s we start Accounting treatment with EDF Adjustment in where we already created EDF loan no.248-17908 (Raw Material LC- 1205502350) credit Tk.4,76,55,888.000
Steps-01. Provision for interest on EDF Loan(321 days)
A. Provision for interest on EDF loan( EDF loan no.248-17908) TK.4,24,931.000
(B.Bank profit charge for (321 days) @1% *($560657.50)/360*321=4999.19@85per)
B. Provision for interest on EDF loan( EDF loan no.248-17908) TK.4,68,616.000
(Branch bank profit charge for (354 days) @1% *($560657.50)/360*354=5513.13@85per)
EDF-24817908 -LC- 1205502350(SIBL)TK.4,68,616.000
Steps-02. Interest charge on EDF Loan (321+354)=675 days
Interest on EDF (SIBL)(424931+468616) Debit TK.8,93,547.000
Provision for interest on EDF loan( EDF loan no.248-17908)creditTK.8,93,547.000
Note: Now Total capitalized loan (4,76,55,888.000+8,93,547.000)= TK.4,85,49,435.000
Steps-03. Partial Adjustment of EDF Loan from CD Account
EDF Loan no.248-17908 (Raw material LC- 1205502350) ($2,50,000@85)TK.2,12,50,000.000
To CD Account(if 10478) credit TK.2,12,50,000.000
Description: (To record partial Adjustment of EDF loan from CD Account)
Steps-04. Remaining Partial Adjustment of EDF Loan from CD Account
EDF Loan no.248-17908 (Raw material LC- 1205502350) ($2,50,000@85)TK.2,72,99,435.000
(4,85,49,435.000-2,12,50,000.000)
To CD Account(if 10932) credit TK.2,72,99,435.000
Description: (To record Final Adjustment of EDF loan from CD Account)
Now existing EDF Loan no.248-17908 (Raw material LC- 1205502350)(Summarize bellow)
Total EDF loan createTK.4,76,55,888.000
Add: Interest((424931+468616)TK.8,93,547.000
Total capitalized EDF loan was(4,76,55,888.000+8,93,547.000)=TK.4,85,49,435.00
Less :Partial Adjustment of EDF Loan from CD Account = TK.4,85,49435
(2,12,50,000.000+2,72,99,435.000)
EDF Loan no.248-17908 (Raw material LC- 1205502350) Balance = Nil....
The END.
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