Question

X draws on Y a bill for ₹ 4,000 which was duly accepted by Y. Y meets the bill on its due date. Show what entries would be passed in the books of X under each of the following circumstances:
(a) If X retains the bill till due date.
(b) If X discounts the same with his banker paying ₹ 100 for discount.
(c) If X endorses the same to his creditor Z in full settlement of his debt of ₹ 4,080.
(d) If X sends the bill to his banker for collection the next day.

Answer 1

Case (a)

Books of X
Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	Bills Receivable A/c	Dr.		4,000
	To Y				4,000
	(Y’s acceptance was received)
	Cash A/c	Dr.		4,000
	To Bills Receivable A/c				4,000
	(Amount of bill received on its maturity)

Case (b)

Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	Bills Receivable A/c	Dr.		4,000
	To Y				4,000
	(Y’s acceptance was received)
	Bank A/c	Dr.		3,900
	Discount Charges A/c	Dr.		100
	To Bills Receivable A/c				4,000
	(Y’s acceptance discount with bank)

Case (c)

Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	Bills Receivable A/c	Dr.		4,000
	To Y				4,000
	(Y’s acceptance was received)
	Z	Dr.		4,080
	To Discount Received A/c				80
	To Bills Receivable A/c				4,000
	(Y’s acceptance endorsed in favour of Z and discount allowed by Z is Rs 80)

Case (d)

Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	Bills Receivable A/c	Dr.		4,000
	To Y				4,000
	(Y’s acceptance was received)
	Bills Sent for Collection A/c	Dr.		4,000
	To Bills Receivable A/c				4,000
	(Y’s acceptance sent to bank for collection)
	Bank A/c	Dr.		4,000
	To Bills Sent for Collection A/c				4,000
	(Y’s acceptance net on maturity)