Amit sold goods for ₹20,000 to Sumit on credit on January 1, 2017. Amit drew a bill of exchange upon Sumit for the same amount for three months. Sumit accepted the bill and returned it to Amit. Sumit met his acceptance on maturity. Record the necessary journal entries under the f

Question

Amit sold goods for ₹20,000 to Sumit on credit on January 1, 2017. Amit drew a bill of exchange upon Sumit for the same amount for three months. Sumit accepted the bill and returned it to Amit. Sumit met his acceptance on maturity. Record the necessary journal entries under the following circumstances:

(i) Amit retained the bill till the date of its maturity and collected it directly;
(ii) Amit discounted the bill @ 12% p.a. from his bank;
(iii) Amit endorsed the bill to his creditor Ankit;
(iv) Amit retained the bill and on March 31, 2017 sent the bill for collection to his bank; on April 5, 2017 the bank advice was received.

Accepted Answer

> [!TLDR]
> Bill value ₹20,000. Discount for 3 months @ 12% p.a. = ₹600 (bank pays ₹19,400). The sale and the acceptance entries are common to all four cases; only the disposal entry changes.

### (i) Bill retained till maturity and collected directly — Books of Amit

| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
|:---|:---|:---:|---:|---:|
| 2017 Jan 1 | Sumit's A/c Dr. | | 20,000 | |
| | To Sales A/c | | | 20,000 |
| Jan 1 | Bills Receivable A/c Dr. | | 20,000 | |
| | To Sumit's A/c | | | 20,000 |
| Apr 4 | Bank A/c Dr. | | 20,000 | |
| | To Bills Receivable A/c | | | 20,000 |

### (ii) Bill discounted @ 12% p.a. — Books of Amit

| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
|:---|:---|:---:|---:|---:|
| 2017 Jan 1 | Sumit's A/c Dr. | | 20,000 | |
| | To Sales A/c | | | 20,000 |
| Jan 1 | Bills Receivable A/c Dr. | | 20,000 | |
| | To Sumit's A/c | | | 20,000 |
| Jan 1 | Bank A/c Dr. | | 19,400 | |
| | Discount A/c Dr. | | 600 | |
| | To Bills Receivable A/c | | | 20,000 |

### (iii) Bill endorsed to creditor Ankit — Books of Amit

| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
|:---|:---|:---:|---:|---:|
| 2017 Jan 1 | Sumit's A/c Dr. | | 20,000 | |
| | To Sales A/c | | | 20,000 |
| Jan 1 | Bills Receivable A/c Dr. | | 20,000 | |
| | To Sumit's A/c | | | 20,000 |
| Jan 1 | Ankit's A/c Dr. | | 20,000 | |
| | To Bills Receivable A/c | | | 20,000 |

### (iv) Bill sent for collection — Books of Amit

| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
|:---|:---|:---:|---:|---:|
| 2017 Jan 1 | Sumit's A/c Dr. | | 20,000 | |
| | To Sales A/c | | | 20,000 |
| Jan 1 | Bills Receivable A/c Dr. | | 20,000 | |
| | To Sumit's A/c | | | 20,000 |
| Mar 31 | Bills Sent for Collection A/c Dr. | | 20,000 | |
| | To Bills Receivable A/c | | | 20,000 |
| Apr 5 | Bank A/c Dr. | | 20,000 | |
| | To Bills Sent for Collection A/c | | | 20,000 |

### Books of Sumit (acceptor) — common to all four cases

Date	Particulars	Debit (₹)	Credit (₹)
2017 Jan 1	Sumit's A/c Dr.	20,000
	To Sales A/c		20,000
Jan 1	Bills Receivable A/c Dr.	20,000
	To Sumit's A/c		20,000
Apr 4	Bank A/c Dr.	20,000
	To Bills Receivable A/c		20,000

Date	Particulars	Debit (₹)	Credit (₹)
2017 Jan 1	Purchases A/c Dr.	20,000
	To Amit's A/c		20,000
Jan 1	Amit's A/c Dr.	20,000
	To Bills Payable A/c		20,000
Apr 4	Bills Payable A/c Dr.	20,000
	To Bank A/c		20,000

(i) Bill retained till maturity and collected directly — Books of Amit

(ii) Bill discounted @ 12% p.a. — Books of Amit

(iii) Bill endorsed to creditor Ankit — Books of Amit

(iv) Bill sent for collection — Books of Amit

Books of Sumit (acceptor) — common to all four cases

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