Question

A bill for rs 10,000 is drawn by A on B which is duly accepted
by the latter. The bill is duly met by B on its due date Show whate entriesv would be passed in the books of A and B under each of the following circumstances:
i) If A retains the bill till the due date
ii) if he discounts it with his bankers for rs 9,750
iii) If he endorses it to his creditor C, in full settlement of
his debt of rs 10,200
iv) if he sends it to his bankers for collection.​

Answer 1

Answer:

a) Y's A/C                         Dr.          10,000

b) Bank A/C                    Dr.     9750

 Discount A/C              Dr.     250

c) Z's A/C                          Dr.          10,200

d) Bills sent for correction A/C         Dr.       10,200

Explanation:

The X account.

Step 1: a) Y's A/C          Dr.          10,000

  To bill receivable A/C       10,000

(If X retains the bill till the due date)

Step 2: b) Bank A/C          Dr.     9750

 Discount A/C        Dr.     250

  To bill receivable A/C       10,000

( If he discounted it with his bankers for Rs. 9.750.  )

Step 3:c) Z's A/C                Dr.          10,200

   To bill receivable A/C       10,000

   To discount received            200

(  If he endorses it to his creditors Z, in full settlement of his debt of Rs. 10,200. )

Step 4:d) Bills sent for correction A/C         Dr.       10,200

     To discount received            200

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