Bill of Exchange

The journal entries in the books of Raj and Pal will be recorded as follows: Book of Raj Amount Amount Apr. Bills Receivable A/c To Pal’s A/c (Received Pal’s acceptance) Apr. Bank A/c , Discount A/c To Bills Receivables A/c (Discount Pal acceptance) Jul. Pal’s A/c , (Remittance to Pal for paying off accommodation bill) Books of Pal Apr.

Raj’s A/c To Bill Payable A/c (Acceptance of accommodation bill drawn by Raj) Jul. To Raj’s A/c (Received Raj’s remittance) Jul. Bill Payable A/c (Discharge of accommodation) Sometimes, the accommodation parties agree to raise the funds through an accommodation bill for mutual benefits. It can be done in any of the following The drawer and the drawee share the proceeds in an agreed ratio Each draws a bill and each accepts a bill In the case (a) the discounting changes are shared by drawer and drewee in the ratio in which they share the proceeds.

But in the case (b) the discount is not shared as each party retains the entire proceeds of the bill drawn and discounted by him. On maturity, each party meets his acceptance out of his own resources if everyone draws and accepts bills of the same denomination and tenure. But