Bill of Exchange

the drawer’s books. This is because he is responsible for the dishonour of the bill and, hence, he has to bear these expenses. For recording the noting charges in his book the drawee opens Noting Charges Acccount . He debits the Noting Charges Account and credits the Drawer’s Account .

For example, Azad sold goods for Rs. , to Bunty and immediately drew a bill upon him on Jan. , payable after months. On maturity the bill was dishonoured and Rs.

were paid by the holder of the bill as noting charges. The journal entries will be recorded in the books of Azad and Bunty as given below under the following (a) When the bill was kept by Azad till maturity. When the bill was discounted by Azad with his bank immediately @ % p.a. (c) When the bill was endorsed by Azad in favour of his creditor Chitra.