accouunting treatment for liability under bills receivalble discounted earlier but now dishonoured
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Bill of exchange requires acceptance by the drawee when it is presented, however, if on presenting the bill of exchange, it gets non-acceptance, it will amount to dishonour.
Dishonour by Non-Payment
When the drawee of the bill of exchange commit default in making the payment of the bill on maturity to the drawer, it is said to be dishonoured of a bill of exchange by non-payment.
Possible reasons why the bill is dishonoured by non-payment?
Due to insufficient funds in the drawee’s a/c.
The drawee is unable to pay because of insolvency, or
The drawee simply does not want to pay
When the bill gets dishonoured, entries that were made at the time of receipt of a bill are reversed.
Dishonour by Non-Payment
When the drawee of the bill of exchange commit default in making the payment of the bill on maturity to the drawer, it is said to be dishonoured of a bill of exchange by non-payment.
Possible reasons why the bill is dishonoured by non-payment?
Due to insufficient funds in the drawee’s a/c.
The drawee is unable to pay because of insolvency, or
The drawee simply does not want to pay
When the bill gets dishonoured, entries that were made at the time of receipt of a bill are reversed.
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