1
Question
When Consignor discounts the bills receivable with bank, then which of the following entry will be passed in the books of Consignor?
A.Consignment A/c
Discount A/c
To Bills Receivable A/c
Dr.
Dr.
A.Bank A/c
Profit & Loss A/c
To Bills Receivable A/c
Dr.
Dr.
C.Bank A/c
Consignment A/c
To Bills Receivable A/c
Dr.
Dr.
D.None of the above.
When Consignor discounts the bills receivable with bank, then which of the following entry will be passed in the books of Consignor?
| A.Consignment A/c Discount A/c To Bills Receivable A/c | Dr. Dr. |
| A.Bank A/c Profit & Loss A/c To Bills Receivable A/c | Dr. Dr. |
| C.Bank A/c Consignment A/c To Bills Receivable A/c | Dr. Dr. |
| D.None of the above. |
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Solution
The correct option is C C
When the consignor discounts a bill of exchange from the bank, it will be an entry similar to that passed when a bill of exchange is discounted in the normal course of business, only difference being that the discount charges, which is an expense for the consignor, will be directly charged to the consignment account as it is an expense which is incurred on account of consignment. So the entry will be:Bank A/c Dr.Consignment A/c Dr. To Bills Receivable A/c
When the consignor discounts a bill of exchange from the bank, it will be an entry similar to that passed when a bill of exchange is discounted in the normal course of business, only difference being that the discount charges, which is an expense for the consignor, will be directly charged to the consignment account as it is an expense which is incurred on account of consignment. So the entry will be:
Bank A/c Dr.
Consignment A/c Dr.
To Bills Receivable A/c
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