Accountancy · Ch 1 — Bills of Exchange
Accounting Treatment — Summary of Journal Entries
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Accounting Treatment — Summary of Journal Entries
Having worked through each situation individually, it helps to see every standard journal-entry pattern side by side, in both the drawer's and the drawee's books, as a single quick-reference table before attempting mixed problems or revising for the AP Board of Intermediate Education (BIEAP) Accountancy examination.
| Situation | Books of Drawer/Holder | Books of Drawee/Acceptor |
|---|---|---|
| Bill drawn and accepted | Bills Receivable A/c Dr; To Drawee's A/c | Drawer's A/c Dr; To Bills Payable A/c |
| Retained till maturity and honoured | Bank A/c Dr; To Bills Receivable A/c | Bills Payable A/c Dr; To Bank A/c |
| Discounted with the bank | Bank A/c Dr, Discount on Bills A/c Dr; To Bills Receivable A/c | No entry at discounting; on the due date: Bills Payable A/c Dr; To Bank A/c |
| Endorsed to a creditor | Creditor's A/c Dr; To Bills Receivable A/c | No entry at endorsement; on the due date: Bills Payable A/c Dr; To Bank A/c (paid to the endorsee) |
| Dishonoured, with noting charges | Drawee's A/c Dr (bill amount + noting charges); To Bills Receivable A/c, To Bank/Cash A/c (noting charges) | Bills Payable A/c Dr, Noting Charges A/c Dr; To Drawer's A/c |
| Renewed, with interest paid in cash | Drawee's A/c Dr; To Bills Receivable A/c (cancel old bill) — Cash A/c Dr; To Interest A/c (interest received) — Bills Receivable A/c Dr; To Drawee's A/c (new bill) | Bills Payable A/c Dr; To Drawer's A/c (cancel old bill) — Interest A/c Dr; To Cash A/c (interest paid) — Drawer's A/c Dr; To Bills Payable A/c (new bill) |
| Retired under rebate | Cash/Bank A/c Dr, Rebate on Bills A/c Dr; To Bills Receivable A/c | Bills Payable A/c Dr; To Cash/Bank A/c, To Rebate on Bills A/c |