International Trade Finance: L/C Application and Discrepancy Analysis

This assignment solution addresses an international trade finance problem where a student, acting as an employee of JP Furniture MFG. Co., is tasked with completing an L/C application form based on a Proforma Invoice (P/I) received from HR Hardwood Supply Co. The assignment requires filling out the L/C application form, referencing the P/I, and then identifying discrepancies between the P/I instructions and the L/C's Swift format. The solution provides a completed L/C application and highlights and corrects discrepancies found in the Swift format, offering insights into the practical application of international trade finance principles, specifically concerning Letters of Credit and their associated documentation and potential issues. The assignment assesses the student's understanding of L/C procedures, discrepancy analysis, and the ability to interpret financial documents within a trade context.

A
International Trade Finance
Final Test
Part 2
Due Date: 6.00 PM, Tuesday- April 07, 2020
This Part of Exam consists of:
L/C Application
L/C Discrepancies
Total of 20 Marks
Total of 9 pages
Length of Exam: Open Till due time and date
Late submission is subject to 5 negative mark per/hour
Please:
1- Complete the L/C application Form in Font color other than black. (the form is in word format and is fillable)
2- Find discrepancies on the L/C swift format compared to the P/I, cross out the discrepancy (to cross out,
select the text you wish to cross and then use “Strikethrough” Button (ab), the selected part should be
crossed through. Then write the correct answer in front of the discrepancy (complete answer in different
font color

International Trade Finance- Part Two
Student Name:________________________ Student ID # _______________
Due Date and time - April. 07, 2020/ 6.00 PM
1. After concluding a contract for sales of “23,000 BF of Surfaced Lumber” between; JP Furniture
MFG. Co. and HR Hardwood Supply Co., JP receives the following P/I form HR to issue a L/C.
Assuming you are JP’s employee working in import department, referring to the P/I instruction,
please:
a) Fill out the L/C application. (10 marks)
b) Comparing the P/I instruction and the L/C being opened thereafter by the issuing bank, find
10 discrepancies. (10 marks)
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HR Hardwood Supply Co
4100 Rocky Mount BLVD., Wierton, WV 00110, USA
Tel: [phone], Fax: [phone]
PROFORMA INVOICE
Invoice of: HR Hardwood Supply Co Invoice No.: HR/150313
From: Any U.S. West Port To: Fukuyama Port, Japan Date: 12th Mar. 2020
For Account and Risk of: JP Furniture MFG. Co.
521-1, Yahata, Fujieda, Tokyo, Japan
Article No. DESCRIPTION QUANTY/Pcs UNIT PRICE TOTAL AMOUNT
1 BF of Surfaced Lumber 23,000 USD 2.85 USD 65,550.00
Total Ex-Work, Wierton, WV USD 65,550.00
Inland Freight & Handling Charges USD 700.00
OCEAN FREIGHT CHARGES: USD 2,300.00
Marine Insurance at 110% of CIF USD 330.00
TOTAL BF 23,000 CIF VALUE USD 68,880.00
TOTAL: SAY US DOLLOR SIXTY-EIGHT THOUSAND EIGHT HUNDRED AND EIGHTY ONLY
Credit Amount Tolerance ±10%
PAYMENT: 100% Irrevocable Sight Letter of credit 120 DAY after shipment in our favour.
DELIVERY TIME: 45 days after receipt of applicable L/C
TRANSSHIPMENT: To be allowed
PARTIAL DRAWINGS: to be permitted
CONTRY OF ORIGIN: USA
PACKAGE: Mono-Extruded Poly Lumber Wrap
INSPECTION: SGS
VALIDITY OF P/I: August 10th 2018
BANK: Union Bank of California, 110 Wall Street,
San Francisco, CA 30010, USA
SWIFT CODE: BOFCUS33CAA
HS #: 4407.10.0068
1. BANKING CHARGES: All banking charges are for the account of buyer.
2. The letter of credit is to be AVAILABLE WITH Union Bank of California, 110 Wall Street, San Francisco, CA. 30010, USA
BY NEGOTIATION, and provide for reimbursement in the U.S. by teletransmission.
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HR

3. This offer and transactions arising therefrom are subject to the Uniform Commercial Code of the State of Ohio, and U.N.
Convention on Contracts for the International Sales of Goods.
APPLICATION FOR AN IRREVOCABLE DOCUMENTARY LETTER OF CREDIT
DAT
E
18/03/2020
T0: XXX BANK PLACE TOKYO, JAPAN
PLEASE ISSUE FOR MY/OUR ACCOUNT AN IRREVOCABLE DOCUMENTARY LETTER OF CREDIT IN ACCORDANCE WITH THE FOLLOWING MENTIONED
PARTICULARS.
APPLICANT/LEGAL ENTITY BENEFICIARY/LEGAL ENTITY
NAME JP Furniture MFG. Co. NAME HR Hardwood Supply Co
ADDRESS 521- 1, Yahata, Fujieda, Tokyo, Japan ADDRESS 4100 Rocky Mount BLVD., Wierton, WV
001100, USA
TEL No. TEL No. 681-640-2000
FAX No. FAX No. 681-640-3000
EMAIL EMAIL
BENEFICIARY’S BANK (FULL NAME AND ADDRESS)
UNION BANK OF CALIFORNIA, 110 WALL STREET, SAN FRANCISCO, CA 30010, USA
ISSUE BY (AIR) MAIL WITH BRIEF ADVICE BY TELETRANSMISSION EXPIRY DATE AND PLACE FOR PRESENTATION OF DOCUMENTS
ISSUE BY TELETRANSMISSION BY COURIER SERVICE EXPIRY DATE 28/09/2020
TRANSFERABLE CREDIT PLACE FOR PRESENTATION USA
CONFIRMATION OF THE CREDIT AMOUNT 68,880.00 CURRENCY USD
NOT REQUESTED REQUESTED NOT EXCEEDING ABOUT / 10 % MORE OR LESS ALLOWWED
AUHTORIZED IF REQUESTED BY BENEFICIARY AMOUNT IN WORDS
CONFIRMATION CHARGES US DOLLAR SIXTY EIGHT THOUSAND EIGHT HUNDRED
AND EIGHTY ONLYAPPLICANT BENEFICIARY
PARTIAL SHIPMENTS
ALLOWED NOT ALLOWED DRAFT TO BE DRAWN AT (SELECT AT LEAST ONE)
TRANSHIPMENT DRAFTS NO NEEDED SIGHT
ALLOWED NOT ALLOWED DEFFERED PAYMENT ________ DAYS SIGHT
PLEASE REFER TO UCP600 TRANSPORT ARTICLES FOR EXCEPTIONS TO
THIS CONDITION
DEFFERED PAYMENT ________ DAYS AFTER BILL OF LADING DATE
PAYABLE ON (SPECIFY DATE: YYYY/MM/DD)
FULL DESCRIPTION OF MERCHANDISE/SERVICE
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IMPORT OF BF OF SURFACED LUMBER OF US ORIGIN
SHIPMENT (SELECT ONE) Shipping Terms (select at least one)
MODE OF TRANSPORTATION: SEA TRANSPORT EX-WORK. FCA DAP
PORT OF LOADING/ FROM: ANY U.S. WEST PORT FOB CPT DDP
PORT OF DISCHARGE/TO: FUKUYAMA PORT, JAPAN CFR CIP OTHERS(SPECIFY):
Latest Shipment Date (yyyy/mm/dd) 2020/05/31 CIF DAT
DOCUMENTS REQUIRED (As Applicable)
COMMERCIAL INVOICE IN ______ ORIGINAL AND ______ COPIES DULY SIGNED BY BENEFICIARY STATING FULL NAME AND
ADDRESS OF THE MANUFACTURER/PRODUCER CERTIFYING THE ORIGIN OF GOODS AND CONTENTS
TO BE TRUE AND CORRECT.
TRANSPORT DOCUMENTS FULL SET OR FULL SET LESS
ON BOARD MARINE BILL OF LADING COVERING PORT TO PORT SHIPMENT ISSUED TO THE ORDER OF XXX BANK
MARKED ______________ __AND NOTIFY “APPLICANT”. THE B/L MUST CONTAIN NAME, ADDRESS,
AND TELEPHONE NUMBER OF THE CARRYING VESSEL’S AGENT AT THE PORT OF DESTINATION.
MULTIMODAL (COMBINED) BILL OF LADING COVERING AT LEAST 2 DIFFERENT MODES OF TRANSPORT AND EVIDENCING GOODS
CONSIGNED TO XXX BANK MARKED FERIGHT___________________NOTIFY APPLICANT.
AIR WAYBILL EVIDENCING GOODS CONSIGNED TO XXX BANK MARKED FERIGHT__________________NOTIFY
APPLICANT. A COPY ON INVOICE, PAKING LIST AND CERTIFICATE OF ORIGIN UST BE ACCOMPANY
THE CONSIGNMENT.
TRUCK WAYBILL EVIDENCING GOODS CONSIGNED TO XXX BANK MARKED FERIGHT__________________ NOTIFY
APPLICANT.
FREIGHT CHARGES PREPAID COLLECT
INSURANCE POLICY/CERTIFICATE
INSURANCE POLICY CERTIFICATE COVERING ___________________________ (SPECIFY RISK
REQUIREMENTS)
INSURANCE COVERED BY APPLICANT
CERTIFICATE OF ORIGIN IN DUPLICATE ISSUED/CERTIFIED BY CHAMBER OF COMMERCE OR IN ITS ABSENCE BY MINISTRY OF
INDUSTRY, CERTIFYING THAT THE GOODSARE OF __________________________________ORIGIN
STATING FULL NAME AND ADDRESS OF THE MANUFACTURER/PRODUCER OF THE GOODS, NAME OF
THE EXPORTER AND THE EXPORTING COUNTRY.
PAKING LIST _____________ ORIGINAL _____________ COPIES
WEIGHT LIST/CERTIFICATE _____________ ORIGINAL _____________ COPIES
SHIPPING MARKS ________________________ (MUST BE INDICATED ON AWB/TRUCK WAYBILL AND PACKING LIST)
OTHER DOCUMENTS AND CERTIFICATE (please specify title, content and number of copies)
ENCLOSED PROFORMA INVOICE FROM THE EXPORTING PARTY (INVOICE NO- HR/150313 DATED- 12/03/2020)
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OTHER TERMS AND CONDITIONS (IF REQUIRED)
SPECIAL INSTRUCTIONS (IF ANY)
LEGALIZATION REQUIRED NOT REQUIRED
BANKING CHARGES
ALL BANKING CHARGES OTHER THAN ISSUING BANK’S CHARGES ARE FORB THE BENEFICIARY’S ACCOUNT, OR
ALL BANKING CHARGES AR FOR THE APPLICANT’S ACCOUNT
DOCUMENTS MUST BE PRESENTED NOT LATER THAN 120 DAYS AFTER DATE OF SHIPMENT.
I/WE AGREE THAT EXCEPT SO FAR AS OTHERWISE EXPRESSLY STATED, THIS IRREVOCABLE IMPORT DOCUMENTARY CREDIT
“CREDIT” WILL BE SUBJECT TO THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS OF INTRERNATIONAL
CHAMBER OF COMMERCE UCP 600 (2007 REVISION). I/WE HEREBY ACKNOWLEDGE AND AGREE TO BE BOUND BY THE
INSTRUCTIONS FOR COMPLETION APPLICABLE TO THE APPLICATION FOR IRREVOCABLE IMPORT DOCUMENTARY CREDIT AND THE
TERMS AND CONDITIONS APPLICABLE TO IRREVOCABLE IMPORT DOCUMENTARY CREDIT AND AUTHORIZE THE BANK TO DEBIT
MY/OUR CURRENT A/C FOR COSS ASSOCIATED WITH THIS APLLICATION AND ESTABLISHMENT OF THE CREDIT.
ACCOUNT NUMBER
AUTHORIZED SIGNATURES
OF APPLICANTS
SIGNSTURE VERIFIED
Page 6 of 9

Letter of Credit in Swift Format
** {1: FIN MESSAGE/Session/OSN F01 BOFCUS33SEAXXX07 090568}
** {2: Output Message Type 700 issue of documentary credit
** Input Time/MIR 1647 930927MEBKJPJTAXXX149291092 ** Received
from Medium Japanese Bank, Ltd., The Tokyo
** Output Date/time 150722 0708
** Priority/Delivery/Obsol. Normal}
------------------------------------------------------------------------------------------------------------
27: Sequence of Total
1/1
40A: Form of Documentary Credit
IRREVOCABLE
20: Documentary Credit Number
S171-00366
31C: Date of Issue
160722 LESS THAN 120 DAYS (Maximum payment period after
shipment)
31D: Date and Place of Expiry
160922 IN USA
50: Applicant
JP FURNITUR MFG.CO. FURNITURE
512-1, YAHATA, FUJIEDA, 521-1
TOKYO, JAPAN
59: Beneficiary
HR HARDWOOD SUPPLY CO.
4100 ROCKY BLVD., WIERTON,
WV 00110, USA
32B: Currency Code / Amount
currency code: USD
amount: # 68,808.00# #68,880.00#
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39A: Pct. credit Amount Tolerance
00/00 ±10%
41D: Available with/by-swift addr:
ANY BANK BY NEGOTIATION Union Bank of California, 110 Wall Street, San Francisco, CA. 30010, USA
BY NEGOTIATION
42C: Drafts at:
SIGHT
42A: Drawee-BIC
MEBKJPJT
Medium Japanese Bank, Ltd.,
The Tokyo
43P: Partial Shipments
PARTIAL SHIPMENTS NOT ALLOWED
43T: Transshipment
ALLOWED
44E: Port of Loading / Airport of Departure
ANY USA PORT ANY U.S. WEST PORT
44F: Port of Discharge / Airport of Destination
FUJIEDA FUKUYAMA PORT, JAPAN
44C: Latest Date of Shipment
160905 YEAR MENTIONED IS WRONG (mm/dd/yy) , i.e. 2005
45A: Description of Goods and/or Services
23,000 BF of Hardwoods Lumber SURFACED LUMBER
46A: Documents Required
1) 3 ORIGINALS PLUS 3 COPIES OF SIGNED COMMERCIAL INVOICE SPECIFYING FOB AMOUNT
SEPARATELY, SHOWING DESCRIPTION OF GOODS AND PAYMENT TERMS OF THIS L/C.
2) 3 ORIGINALS PLUS 3 COPIES OF OCEAN BILL OF LADING, CONSIGNED TO THE ORDER OF JP
FURNITURE MFG. CO. , LOCATED IN: 521-1, YAHATA, FUJIEDA, TOKYO, JAPAN, NOTIFY THE SAME
AS CONSIGNEE, MARKED TOTAL FREIGHT COLLECT, SHOWING ITS VALUE IN FIGURES.
3) 3 ORIGINAL OF PACKING LIST INDICATING QUANTITY/GROSS AND NET WEIGHT OF EACH
PACKAGE.
4) 02 ORIGINAL OF CERTIFICATE OF ORIGIN.
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47A: Additional Conditions
1) MULTIMODAL/COMBINED TRANSPOT DOCUMENTS ACCEPTABLE
2) NUMBER OF THIS LETTER OF CREDIT MUST BE STATED IN ALL COMMERCIAL DOCUMENTS AND
B/L.
3) USD.40,00 FEE WILL BE DEDUCTED FROM PAYMENT FOR EACH SET OF DISCREPANT DOCUMENTS
PRESENTED.
71B: Charges
ALL BANKING CHARGES OUTSIDE USA ARE FOR BUYER'S ACCOUNT.
48: Period for Presentation
DOCUMENTS MUST BE PRESENTED WITHIN 15 DAYS AFTER THE DATE OF SHIPMENT BUT WITHIN
THE VALIDITY OF THIS CREDIT 120 DAYS
49: Confirmation Instructions
CONFIRMED BY LONDON CHARTER BANK
78: Instructions to the Paying / Accepting / Negotiating Bank
1) T/T REIMBURSMENTS ARE NOT ALLOWED.
2) THE AMOUNT OF EACH DRAWING MUST BE ENDORSED ON REVERSE OF THIS L/C BY
NEGOTIATING BANK.
3) ALL DOCUMENTS MUST BE SENT TO US IN TWO LOTS
4) WE HEREBY UNDERTAKE THAT ALL DRAFTS AND DOCS IN COMPLIANCE WITH THIS L/C TERMS
WILL BE DULLY ACCEPTED ON PRESENTATION AT THIS OFFICE AND PAID AT THE MATURITY
DATE.
3) PLEASE ADVISE BENEFICIARY URGENTLY UNDER ADVISE TO US.
END OF MESSAGE
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