Accountancy · Ch 8 — Accounting for Bills of Exchange

Bills Receivable Book and Bills Payable Book

When a business handles only a few bills, it records them directly in the journal. But a

business that deals in a large number of bills maintains two special subsidiary books — the

Bills Receivable Book and the Bills Payable Book — instead of passing individual

journal entries for each bill. (This concept is prescribed by the Learning Objectives of this

chapter and is tested in the practice questions, even though this edition prints no separate

numbered section for it.)

The Bills Receivable Book records, in one place, the details of every bill of exchange and

promissory note received by the business. Each bill is entered in a separate row, and

periodically the total is posted to the debit of the Bills Receivable Account in the

ledger; each individual drawee's (customer's) account is credited with the amount of his bill.

A typical proforma is:

Date of receipt	From whom received	Acceptor	Date of bill	Term	Due date	Amount (₹)	How disposed of

Advantages: it saves time by avoiding a separate journal entry for each bill, keeps all

bills-receivable information together, and makes posting to the ledger quick and reliable.

The Bills Payable Book records the details of every bill of exchange and promissory note

accepted by the business. Each accepted bill is entered in a row, and periodically the total

is posted to the credit of the Bills Payable Account; each individual drawer's (creditor's)

account is debited with the amount of his bill. A typical proforma is: …