Question

Krishna sold goods to Hari for Rs.1,000 on 1

st Jan. 2020. As a result Krishna draws a four

months bill on Hari for Rs. 1,000 on 1st Jan., 2020. Hari accepts the bill and returns it to

Krishna. On 1

st March 2020, Hari became insolvent, only 40 paise in a rupee can be recovered

from Hari. Give Journal Entries in the Books of Hari and Krishna.​

Answer 1

Answer:

Journal Entry for Bills of Exchange

Before we start with the Journal Entry for Bills of Exchange, let us understand first what a bill of exchange is. A bill of exchange is a negotiable instrument under the Negotiable Instrument Act, 1881. It is an instrument in writing. It contains an unconditional order requiring a certain person to pay a certain sum of money on a stipulated date. There are three parties i.e. Drawer, Drawee, and Payee.