How to write letter of credit according to this case?

Michael and Monica Garcia are the directors of Ancan Canada located at 32 Drink Water Lane, Brampton L4A 3P1 phone number 905 785 2230.The company has specific interest in manufacturing straps used to secure loads transported by trucks and boats.

Over the years they have been challenged by high cost to import raw material from the USA.Finally, they found a supplier in Costa Rica.The newness of the business relations have forced them to sort trade finance from their bank.

The information below was included in their three months cashflow

Sales revenue for January is $250,000, and it is expected to increase by 10% in February and a further 10% in March when compared with February.

Their inflow and out flows are as follows:

Salaries $120,000 will remain the same monthly

Utilities $30,000 in January and increased by 5% of the previous month

Rent $10,000 monthly

Repairs $5,000 and increased by 5% monthly of the previous month

Deliver Expenses $5,000 monthly

In February the company received dividend of $4,000 for ACB Corporations

The company purchased computers for business use costing $8,000, in March but they will not pay for them until April

The company sold a Truck in January and will receive payment of $8,000 in March.The truck was used to deliver goods for the business.

Paid their loan of $7,500 in January

Paid dividend of $150,000 in March

Received loan of $200,000 in January, the amount will be used as working capital

Sold their rental property in March and received payment in the same month $750,000.Their rental income for February and March is $25,000 monthly.

Received outstanding receivables as follows: January $80,000, February $70,000 and March $95,000

The interest received on the receivables are as follows: $1,500, $7,000 and $2,000 for the respective months

The company paid interest on it's loan $1,500, $2,000 and $1,800 for the months of January, February and March respectively and received interest of $900, $2500 and $7,000 for the respective months

Freight cost $32,000, $18,000 and $7000 for the respective months of January, February and March

Purchased raw material for the business in February $80,000 and March $120,000, the amount for march will be paid in April and February payable will be made in March.

It is February 1, 2016 and the directors were very happy to learn that their bank National Bank at 37 Windflower Road Brampton L7A 4P5 had approved their trade finance loan of $48,000.On the same day the Garcias quickly placed their so needed order to their new supplier Raquel Jimenez at Casa #508, Lomas Del Sol, Curridabat, San Jose,Costa Rica, 11801.

Normally Michael would use the recommended shipping company ZIM70 at 400 Northridge Rd., Suite 130, Atlanta, Ga 30350-3352 U.S.A. but he just found a new company, Canada Steamship Lines at 759 Square Victoria, Montreal, Quebec Canada H2Y 2K3 phone number 514 982-3801which guaranteed him a quicker delivery time.A week later his suppliers called to advise that the goods were ready for shipment; the ship is expected to be at sea for two weeks and the freight would be paid in Toronto on arrival of the ship.His bank manager Bibi Hussain quickly prepared the Letter of Credit on February 2, 2016 to Raquel Jimenez bank - National CommercialBank of Costa Rica atCasa #101, Lomas Del Sol, Curridabat, San Jose,Costa Rica,11801. The letter expires in thirty days with stipulation that payment will be made upon receipt of a valid Bill of Lading.

As soon as the goods were shipped Rita Comps couriered the Bill of Lading BVC12wrDf to the bank for immediate payment of Letter of Credit # 02/2016.

The goods arrived at the port on entry in Toronto from port Curridabat in Costa Rica.Immediately Michael was notified.The content of the goods were as follows:

40 packs- 10,000 wire enforcer with a weight of 200 pounds total cost $25,000

20 packs -8,000 fastens weight 100 pounds total cost $ 15,000

50 packs- 120, 000 custom tapes, weight 900 total cost $8,000

Freight is being paid on delivery and in CDN dollars.