FINANCIAL ACCOUNTING STUDYNOTES

BILLS OF EXCHANGE

Transaction
1. When the bill is drawn by
the drawer and accepted by
drawee
Entries in the books of Entries in the books of Entries in the books of
drawer drawee Endorsee / Creditors
Bills Receivable A/c Dr Drawer A/c Dr
To Drawee A/c To Bills Payable A/c

2. When the bill is honoured at Cash / Bank A/c Dr Bills Payable A/c Dr
maturity To Bills Receivable A/c To Cash / Bank A/c

3. When the bill is discounted Cash / Bank A/c Dr NO ENTRY

by the bank Discount A/c Dr
To Bills Receivable A/c
4. When the bill is Endorsed to Creditors A/c Dr NO ENTRY Bills Receivable A/c Dr
the Creditor To Bills Receivable A/c To Drawer A/c

5. When the bill is sent to the Bills for Collection A/c Dr NO ENTRY Bill for Collecton A/c Dr
bank for collection To Bills Receivable A/c To Bills Receivable A/c

6. When the bill is

dishonoured in different
cases: -

a. If retained up to due date Drawee’s A/c Dr Bills Payable A/c Dr Drawer’s A/c Dr
To Bills receivable/c To Drawer A/c To Bills Receivable A/c

b. If discounted by bank Drawee’s A/c Dr - DO - Drawer’s A/c Dr

To Bank A/c To Bank A/c

c. If endorsed to a creditor Drawee’s A/c Dr - DO - Drawer’s A/c Dr

To Endorsee A/c To Endorsee A/c

d. If sent to the bank for Drawee’s A/c Dr - DO - Drawer’s A/c Dr

collection To Bills sent for collection To Bills sent for collectin

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FINANCIAL ACCOUNTING STUDYNOTES

SUBRAMANIAM C M.COM, L.L.B. H.O.D COMMERCE DEPT.