Training Manual (LC Scenario)

Master Textile Mills Limited

Training Material
LC Scenario

A. F. Ferguson & Co
Chartered Accountants

A member firm of

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 Training Manual (LC Scenario)

1- Go to Purchase Requisition form and fill in the required information.

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2- Go to Currency tab and select foreign currency, conversion rate type, then
enter the rate. Save PR and get it approved.

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3-Go to “AutoCreate” function and fill in relevant Purchase Requisition Number,

Operating Unit etc and click FIND

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4- Select relevant check box and click on “Automatic”

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5- Enter Supplier name. Select source to First Requisition Currency or Specify (give
requisition number in case of specify) and Currency. Then click“Create”

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6- Standard PO would automatically be generated. Then go to the PO header DFF

and fill in the relevant LC Number (TM/2012 in our case).

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7- Fill in items to be purchased on PO Lines and Save the PO. Submit it for approval.

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8- After PO is approved, navigate to Receiving
Receipts. Give relevant Operating Unit and PO
Number and click on “FIND”. Following screen will appear. Click on DFF.

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9- Fill in all relevant information along with the LC Number (TM/2012) and relevant shipment
number, we are taking shipment as “1” for this scenario as an example. Click on “OK” and then
save.

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10- Complete the Receipts procedure as per standard way.

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11- Navigate to “Receiving”
“Receiving Transactions” and find for the items through PO
Number/ Receipt Number. Get the goods inspected as per standard way.

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12- Navigate to “Receiving”
“Receiving Transactions” and find for the items through PO
Number/ Receipt Number. Get the goods delivered to inventory by entering Sub inventory,
Locator and LOT information

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13- In Accounts Payable raise an invoice against relevant supplier and Match the PO with that
invoice. Please note that the invoice raised would only comprise of Item cost.

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14- Select quantity of item to be matched to the invoice and click “MATCH”. Get the invoice
Validated.

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15- Get the invoice validated. And pay it out of relevant bank if applicable.

For any issues regarding processing invoices please see “Accounts Payable Training Manual”.

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16- For any invoices other than Item, raise invoices against relevant suppliers, for example:
Expense Type Supplier (Just as an example)
Bank Charges Relevant Bank to whom charges are paid (National bank)
Transportation Charges ABC Goods Transport
Insurance Charges EFU Insurance Company

In all these invoices raised please give “LC Importation Cost” account in the distributions
regardless of the type of expense. Click OK.

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17- On same invoice distributions screen where LC Importation Cost account was given, open
the DFF and fill in the relevant information LC Number (TM/2012), LC Shipment Number (1) and
relevant expense type in LC Expenditure field. Pay these invoices as required.

Please note that only those entries would appear in Cost Sheet report that have “LC
Importation Cost” in Invoice distributions and relevant LC Number in DFF for which report is
run.

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18- After all relevant invoices have been entered, please go to View
Requests
Submit New
Request
Single Request
“Customized - L/C Cost Sheet”. Enter information of LC as LC
Number and Shipment Number and Submit Request.

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19- View output of the file. As we can see from screenshot below that balance is -20,000 which
means LC Importation cost account holds 20,000 Credit Balance.

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20- Process following JV in General Ledger to close the LC. If LC Importation cost is holding
Credit Balance it will be debited, and if it is DEBIT Balance then we will Credit LC Importation
Cost in this JV. In our case we are giving LC Importation cost in debit. Other account should be
any period cost account as directed by the relevant authorities.

Save it and POST this JV. After this LC process is complete.

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