Q.On 1st July 2026, Sunil sold goods to Prakash for Rs 30,000. Sunil drew a bill for 3 months, which Prakash accepted. On the same day, Sunil discounted the bill with his bank at 10% p.a. On the due date, the bill was dishonoured, and the bank paid noting charges of Rs 200, recovering the total amount from Sunil. Give journal entries in the books of both Sunil (drawer) and Prakash (drawee).

Dishonour occurs when the drawee fails to pay on the due date; the debt reverts to an ordinary personal account, increased by any noting charges (the Notary's fee for certifying the dishonour, recoverable from the defaulting drawee). Drawer: Drawee's A/c Dr (bill amount + noting charges), To Bills Receivable A/c (if retained) or To Bank A/c (if discounted/collected — the bank recovers its payment plus noting charges from the drawer). Drawee: Bills Payable A/c Dr + Noting Charges A/c Dr, To Drawer's A/c. Renewal: before the due date, the drawee requests cancellation of the old bill and a fresh bill (usually plus interest) for a later date — three-step entries (cancel old bill, charge/record interest, record new bill) mirrored in both parties' …