Page 7 - LESSON NOTE

Discounting the bill Bank A/c Dr. No entry

Discount A/c Dr.

To Bills Receivable A/c
Maturity of the bill No entry Bills Payable A/c Dr.

To Bank A/c

4 . When the bill is retained by the drawer with him and sent to bank for collection a few days
before maturity

Transaction Books of Creditor/Drawer Books of Debtor/ Acceptor

Sale/Purchase of goods Debtor’s A/c Dr. Purchases A/c Dr

. To Sales A/c To Creditor’s A/c

Receiving/Accepting the bill Bills Receivable A/c Dr Creditor’s A/c Dr.

To Debtor’s A/c To Bills Payable A/c

Sending the bill for collection Bills sent for collection A/c Dr. No entry

To Bill Receivable A/

Maturity of the bill Bank A/c Dr Bills Payable A/c Dr.

To Bills sent for collection A/c To Bank A/c

Dishonour of a Bill

A bill is said to have been dishonoured when the drawee fails to make the payment
on the date of maturity. In this situation, liability of the acceptor is restored.
Therefore, the entries made on the receipt of the bill should be reversed. For
example, Anju received bill of exchange duly accepted by Manju, which was
dishonoured. The entries of dishonour will be as follows in the books of Anju

(receiver):

When the bill was kept by Anju with her till maturity

Manju’s A/c Dr.