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 and Y under each of the following circumstances:
(i) If X retains the bill till due date.
(ii) If X discounts the same with his banker paying ₹ 100 for discount.
(iii) If X endorses the same to his creditor Z, in full settlement of his debt of ₹ 4,080.
(iv) If X sends the bill to his banker for collection.

Answer 1

Books of X Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
	Bill drawn by X
	Bills Receivable A/c	Dr.		4,000
	To Y				4,000
	(Y accepted the bill)
	Case (i): Bill retained till maturity
	Cash A/c	Dr.		4,000
	To Bills Receivable A/c				4,000
	(Bill honoued on maturity)
	Case (ii): Bill discounted with bank
	Bank A/c	Dr.		3,900
	Discounting Charges A/c	Dr.		100
	To Bills Receivable A/c				4,000
	(Bill discounted with the bank)
	Case (iii): Bill endorsed to Z
	Z	Dr.		4,080
	To Bills Receivable A/c				4,000
	To Discount Received A/c				80
	(Bill endorsed in favour of Z)
	Case (iv): Bill sent to bank for collection
	Bills Sent for Collection A/c	Dr.		4,000
	To Bills Receivable A/c				4,000
	(Bill sent to bank for collection)
	Bank A/c	Dr.		4,000
	To Bill Sent for Collection A/c				4,000
	(Bill honoured on maturity)

Books of Y Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
	Bill accepted by Y
	X	Dr.		4,000
	To Bills Payable A/c				4,000
	(Bill drawn by Y, accepted)
	Same entry will be passed in all the four cases
	Bills Payable A/c	Dr.		4,000
	To Cash A/c				4,000
	(Bill honoured on maturity)