What is the Bangladesh standard on Audit(BSA-300) ? Describes in details

corporate practice bd

When dealing with the realization of export proceeds under a Sight Letter of Credit (LC), the process is slightly different compared to regular export sales. A Sight LC involves immediate payment upon presentation of compliant documents. Here's the accounting treatment for realizing export proceeds under a Sight LC:

1. Presentation of Documents:

   • Once the exporter ships the goods, they prepare the required documents according to the terms of the Sight LC.
   • These documents typically include the invoice, bill of lading, packing list, certificate of origin, and any other documents specified in the LC.

2. Submission of Documents to the Bank:

   • The exporter presents the documents to their bank (negotiating bank or the confirming bank) as per the terms of the Sight LC.
   • The bank reviews the documents for compliance with the LC terms.

3. Receipt of Payment from Bank:

    If the documents are compliant, the bank immediately makes payment to the exporter's account for the full invoice value or the LC amount, as specified in the LC terms.

4. Accounting Treatment:

   • Debit: Bank Account (to record the funds received)
   • Credit: Sales Revenue (to recognize the export sale)

5. Foreign Exchange Gains or Losses (if applicable):

   • If the Sight LC is denominated in a foreign currency and the payment is received in a different currency, there might be foreign exchange gains or losses due to currency fluctuations.
   • Debit/Credit: Foreign Exchange Gain/Loss Account (to record the currency gain or loss)
   • Credit/Debit: Bank Account (to reflect the actual amount received after conversion)

6. Reconciliation:

   • Regularly reconcile the export receivables account with the actual receipts to ensure accuracy in the books.

7. Document Retention:

   • Keep copies of all relevant LC-related documents, invoices, bills of lading, and payment receipts for proper record-keeping.

As always, ensure that you follow the accounting standards and practices applicable in your jurisdiction and industry. It's recommended to consult with your organization's accountants or financial advisors to ensure accurate and compliant accounting treatment for your specific circumstances.

Practical Example-01.

The ABC Company LTD, Produce & Yarn sales 15,000 Kg .Average Production capacity -18,000kg, Sales are occurred to the other party name Super fabrics Ltd.

After 120 days, final settlement the bill bank send realize voucher copy to the client of The ABC Company LTD,

 

Currently, the ABC Company LTD, sale to the other party name -Super fabrics Ltd, 7cd (BCI) 5000kg@$2.00=$10,000  against” At Sight LC” Exchange BDT @92.per Dollar, Amount of TK.9, 20,000,

Finally bill of exchange are prepared, after Acceptance the bill, our commercial department already submit the bill to the Bank for Final settlement.

 Bank after final settlement the bill, already Acceptance copy & realized voucher at dated 30.04.2023 & sent to the client Mail ID. Accounting department of The ABC Company LTD, Print the copy’s & also takes necessary following action.

 

SL NO.	Particulars	Debit(TK)	Credit(Tk.)
01.	Bank deduct  Tk.300 against LC advising charge
	Bank charge(Export)	300
	CD A/C no.57948		300
	(To record LC advising charge by bank)
03.	After Acceptance Final settlement the bill$(10000*92%)
	ERQ  A/C- No.1002256 (SIBL) $1350*108.50	146475
	FC-Held A/C- No.10580 (STDBL)$8000@108.50	868000
	Export bill collection Charge($50*108.50)	5425
	Advance income tax(AIT@1% of LC value)(SIBL)$10,000@1%*108.50	10850
	Foreign exchange (Gain) /Loss		110750
	Party -Super fabrics Ltd ($10,000@92)		9,20,000
	To record Final settlement bill LC value $ 10,000received$ 476.2857@108.50 dt.28.08.2023