Book-Keeping and Accountancy · Ch 5 — Subsidiary Books
Bills Receivable Book and Bills Payable Book
Bills Receivable Book and Bills Payable Book
A Bill of Exchange (or a Promissory Note) is a written, signed instrument by which one party promises, or is ordered, to pay a certain sum of money to another party on a specified future date. Whenever a business receives such an instrument from a debtor, or itself accepts one drawn on it by a creditor, the transaction is recorded not in the ordinary Journal but in one of two dedicated books. (The full mechanics of bills of exchange — drawing, acceptance, endorsement, discounting, dishonour — belong to a later stage of this Maharashtra HSC (MSBSHSE) Book-Keeping and Accountancy syllabus; this chapter covers only the two Subsidiary Books used to record them.)
Bills Receivable Book
The Bills Receivable Book records every bill of exchange or promissory note RECEIVED by the business from its debtors (in settlement of what they owe).
Bills Payable Book
The Bills Payable Book records every bill of exchange ACCEPTED by the business, payable by it to its creditors (in settlement of what it owes them).
Due date and the grace period: unless a bill is payable "on demand" or "at sight," it is payable a fixed term after its date. By long-standing commercial custom, 3 days of grace are added to the period stated on the bill to arrive at the actual due date (also called the date of maturity). If a calculated due date falls on a public holiday, the bill matures one day earlier; if it falls on an unforeseen (emergency) holiday, it matures one day later.
Format of the Bills Receivable Book
| Date of Receipt | Name of the Debtor (Acceptor) | Date of Bill | Term | Due Date | Amount (₹) |
|---|
Format of the Bills Payable Book
| Date | Name of the Creditor (Drawer) | Date of Bill | Term | Due Date | Amount (₹) |
|---|
Illustration 5 — Preparing a Bills Receivable Book
- May 5 — Received a bill from Ganesh, a debtor, dated May 1, for ₹10,000, tenure 3 months.
- May 20 — Received a bill from Ramesh, a debtor, dated May 15, for ₹8,000, tenure 2 months.
Working (due dates): Ganesh's bill — May 1 + 3 months = Aug 1; + 3 days' grace = Aug 4. Ramesh's bill — May 15 + 2 months = Jul 15; + 3 days' grace = Jul 18.
Bills Receivable Book
| Date of Receipt | Name of the Debtor | Date of Bill | Term | Due Date | Amount (₹) |
|---|---|---|---|---|---|
| May 5 | Ganesh | May 1 | 3 months | Aug 4 | 10,000 |
| May 20 | Ramesh | May 15 | 2 months | Jul 18 | 8,000 |
| Total | 18,000 |
Ledger posting: Bills Receivable A/c ... Dr ₹18,000; To Ganesh A/c ₹10,000; To Ramesh A/c ₹8,000 (each debtor's account is reduced by the amount of the bill given).
Illustration 6 — Preparing a Bills Payable Book
- Jun 3 — Accepted a bill drawn by Suresh, a creditor, dated Jun 1, for ₹5,000, tenure 1 month.
- Jun 15 — Accepted a bill drawn by Mahesh, a creditor, dated Jun 10, for ₹7,000, tenure 2 months. …
A subsidiary book recording every bill of exchange or promissory note received by the business …
A subsidiary book recording every bill of exchange accepted by the business, payable t …