The document describes the accounting entries for transactions involving bills of exchange under different situations: when the bill is retained, discounted, endorsed, or sent for collection. It provides entries for the initial sale on credit, acceptance of the bill, treatment and honour or dishonour. It also covers entries for renewal of a bill, including cancellation of the old bill, part payment, interest charged, and acceptance of the new bill.

6. Transactions
Where the B/E is
retained
Where the B/E is
Discounted
Where the B/E is
Endorsed
Where the B/E is
Sent to Bank for
Collection
1. Sale of Goods
on credit
Debtor’s A/c Dr.
To Sales A/c
Debtor’s A/c Dr.
To Sales A/c
Debtor’s A/c Dr.
To Sales A/c
Debtor’s A/c Dr.
To Sales A/c
2. Drawing of B/E
NO ENTRY
3. Acceptance of
Bill
B/R A/c
Dr.
To Debtor’s A/c
B/R A/c
Dr.
To Debtor’s A/c
B/R A/c
Dr.
To Debtor’s A/c
B/R A/c
Dr.
To Debtor’s A/c
4. Treatment of
Bills
No Entry
Bank A/c
Dr.
Dis. Charges A/c Dr
To B/R A/c
Endorsee’s A/c Dr.
To B/R A/c
Bills Sent for
Collection A/c Dr.
To B/R A/c
5. Honour of a Bill
Cash/Bank A/c Dr. No Entry
To B/R A/c
No Entry
Bank A/C
Dr.
To Bills Sent for
Collection A/c
6. Dishonour of a
Bill
Debtors A/c
Dr.
(By B.R. + Noting
Charges)
To B/R A/c
To Cash A/c
Debtors A/c Dr.
(By B.R. + N.C.)
To Endorsee’s A/c
Debtors A/c Dr.
(By B.R. + N.C.)
To Bills Sent for
Collection A/c
To Bank A/c
Debtors A/c
Dr.
(By B.R. + N.C.)
To Bank A/c

7. Transactions
Where the B/E is
retained
Where the B/E is
Discounted
Where the B/E is
Endorsed
Where the B/E is
Sent to Bank for
Collection
7. Renewal of Bill
of Exchange
a) Cancellation
of old B/E
Debtor’ A/c
To B/R A/c
Dr. Debtor’ A/c
To Bank A/c
Dr.
b) Part Payment
by the Drawee
Cash A/c
To B/R A/c
Dr.
Dr.
c) Interest
Charged On
Drawee
Debtor’s A/c Dr.
To Interest A/c
Debtor’s A/c Dr.
To Interest A/c
Debtor’s A/c Dr.
To Interest A/c
Debtor’s A/c Dr.
To Interest A/c
d) Acceptance
of new B/E
B/R A/c
Dr.
To Debtor’s A/c
B/R A/c
Dr.
To Debtor’s A/c
B/R A/c
Dr.
To Debtor’s A/c
B/R A/c
Dr.
To Debtor’s A/c
Cash A/c
To B/R A/c
Debtor’ A/c
Dr. Debtor’ A/c
Dr.
To Endorsee’s A/c
To Bills Sent for
Collection A/C
Cash A/c
Dr. Cash A/c
Dr.
To B/R A/c
To B/R A/c

8. Transactions
Accounting Treatment
1. Sale of Goods on Credit
Purchases A/c
Dr.
To Creditor’s A/c
2. Drawing of B/E
No Entry
3. Acceptance of B/E
Drawer’s A/c
To B/P A/c
4. Treatment of Bills
No Entry
5. Honour of a Bill
B/P A/c
Dr.
To Cash/ Bank A/c
6. Dishonour of a B/E
Bills Payable A/c
Dr.
Noting Charges A/c Dr.
To Drawer’s A/c
7. Renewal of a B/E
a) Cancellation of old B/E
b) Part Payment by the Drawee
c) Interest Charged On Drawee
d) Acceptance of new B/E
Dr.
B/P A/c
Dr.
To Drawer’s A/c
Drawer’s A/c
Dr.
To Cash A/c
Interest A/c
Dr.
To Drawer’s A/c
Drawer’s A/c
Dr.
To Bills Payable A/c