Question

At the time of the renewal of a bill, interest account is ____________ in the books of the drawee.

• A. credited
• B. totalled
• C. debited
• D. posted

Answer 1

The correct option is C debited

In the books of Acceptor

1] Entry for Cancellation of Bill:

Bills Payable A/c ……….………….. Dr

To Drawer Personal A/c

2] Entry for part payment in cash:

Drawer’s Personal A/c……………… Dr

To Cash A/c

3] Entry for Interest Paid:

Interest A/c …………………………. Dr

To Cash A/c

4] Interest not paid:

Interest A/c …………………………. Dr

To Drawer’s Personal A/c