Question

Disclunted a Bill of Exchange for ₹1000 at 1% through bank. Entries in Cashbook?

Answer 1

Answer:

Bank A/c      Dr        990

Discount A/c  Dr        10

       To Bills Receivable A/c     1000

Explanation:

When a bill is discounted by a person , a certain amount is a charge paid to bank for the same. The value of bill is received in bank account of the person only and thus Bank A/c is debited. Since discounting charge is an expense it is also debited.

While the bill was accepted by the debtor the Bills Receivable A/c was debited and thus when the amount is being aid on it the same amount will be credited , dual entry effect.