Q.On 1st January 2024, Krishna sold goods to Prasad for ₹20,000 on credit. On the same day, Krishna drew a bill on Prasad for the amount, payable 3 months after date, which Prasad duly accepted and returned. On the due date, Prasad honoured the bill in full. Journalise the above transactions in the books of Krishna (drawer) and Prasad (drawee/acceptor).

When a bill is retained by the drawer till maturity and paid in full by the acceptor, the entries are the simple mirror-image closing of the Bills Receivable and Bills Payable accounts.

Three distinct events must be journalised — the credit sale, the drawing/acceptance of the bill, and the honour of the bill on the due date — and each appears in mirror-image form in the two sets of books. The due date works out to 1 Jan + 3 months + 3 days grace = 4th April 2024.

In the books of Krishna (Drawer)

In the books of Prasad (Drawee/Acceptor)

Verification: In every pair of corresponding entries, the amount debited in one book equals the amount credited in the other (₹20,000 throughout, since no interest, discount or charges are involved in a straightforward honour), confirming the entries are consistent mirror images.

Forgetting to record the underlying credit sale/purchase entry before the bill entry; recording the honour entry in Prasad's books as a debit to Krishna's personal account instead of Bills Payable; and using the date of the bill instead of the calculated due date for the honour entry.