Bills of exchange accounting entry summary

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Bills of exchange accounting
entry summary

Accounting entries - Summary
When bill is retained till maturity

When bill is discounted with bank

When bill is endorsed to a third party

When bill is retained till maturity but dishonoured
Transaction Books of Creditor/Debtor Books of Acceptor
Sale/Purchase of goods Debtor’s a/c Dr
To Sales a/c
Purchase a/c Dr
To Creditor
Receiving/ Accepting the
bill
Bills Receivable a/c Dr
To Debtor
Creditor a/c Dr
To Bills Payable
On dishonour and noting
charges incurred
Debtor a/c Dr
To Bills Receivable
To Cash
Bills Payable a/c Dr
Noting Charges a/c Dr
To Creditor

When bill is discounted but is subsequently dishonoured
Sale/Purchase of goods Debtor’s a/c Dr
To Sales a/c
Purchase a/c Dr
To Creditor
Receiving/ Accepting the
bill
To Debtor
Creditor a/c Dr
To Bills Payable
On discounting the bill Bank a/c Dr
Discount a/c Dr
To Bills Receivable
No entry
On dishonour and noting
charges incurred
Debtor a/c Dr
To Bank
To Creditor

When bill is endorsed to a creditor but is subsequently dishonoured
Sale/Purchase of
goods
Debtor’s a/c Dr
To Sales a/c
Purchase a/c Dr
To Creditor
Receiving/ Accepting
the bill
To Debtor
Creditor a/c Dr
To Bills Payable
On endorsing of the
bill
Creditor a/c Dr
To Bills Receivable No entry
On dishonour and
noting charges
incurred
Debtor a/c Dr
To Creditor
(bill amount + noting charges
To Creditor

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Bills of exchange accounting entry summary

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Bills of exchange accounting entry summary