Question

On 1st Jan, 2017 X sold goods to Y for Rs 10,000 on credit basis. On the same date X drew a bill for Rs 10,000 on Y at two months. Y accepted the bill and returned it to X. On the due date Y could not honor acceptance. What is the journal for recording the dishonor of a bill?

• A. Y A/c Dr 10,000 To Bills recievable A/c 10,000
• B. Bills Receivable A/c Dr. 10,000
  To Y A/c 10,000
• C. Bills Payable A/c Dr 10,000
  To X A/c Rs. 10,000
• D. X A/c Dr. 10,000 To Bills payable A/c 10,000

Answer 1

The correct option is A Y A/c Dr 10,000

To Bills recievable A/c 10,000

Option A is the correct one.

The Journal entry for recording the dishonor of a bill will be:

Y (Debtors) a/c Dr 10000
To Bills receivable A/c 10000

( Being bill dishonored)