Bill of Exchange

In the books of Azad, entries will be recorded as: (i) When the bill was retained till its maturity Books of Azad Amount Amount Jan. Bunty’s A/c To Sales A/c (Sold goods to Bunty) Bills Receivable A/c To Bunty’s A/c (Received Bunty’s acceptance) Apr. Bunty’s A/c , To Cash A/c (Bunty dishonoured his acceptance and paid Rs. as noting charges) (ii) When the bill was discounted with the bank. Jan. Bunty’s A/c To Sales A/c (Sold goods to Bunty) Bills Receivable A/c To Bunty’s A/c (Received Bunty’s acceptance payable after three months) , Discount A/c (Bunty’s acceptance discounted) Apr. Bunty’s A/c , , (Bunty dishonoured his acceptance on maturity and bank paid noting charges) (iii) When the bill was endorsed to Chitra Amount Amount Bunty’s A/c To Sales A/c (Sold goods to Bunty) Jan. Bill’s Receivable A/c To Bunty’s A/c (Received Bunty’s acceptance) Chitra’s A/c (Bunty’s acceptance endorsed in favour of Chitra) Apr. Bunty’s A/c , To Chitra’s A/c , (Bunty dishonoured his acceptance on maturity and chitra paid Rs. as noting charges) The following journal entries will be made in the books of Bunty in all the three cases. Book of Bunty Jan. Purchases A/c To Azad’s A/c (Purchase goods from Azad) Azad’s A/c To Bills Payable A/c (Accepted Azad’s draft) Apr. Bills Payable A/c Noting charges A/c To Azad’s A/c , (Acceptance in favour of Azed dishonoured)