Q.Sudha drew a bill on Ramesh for ₹15,000, payable 2 months after date, for goods sold. Ramesh accepted the bill. On the due date, the bill was presented through Sudha's bank but was dishonoured; the bank paid noting charges of ₹200 on Sudha's behalf. Journalise the dishonour in the books of both Sudha and Ramesh.

On dishonour, the bill account is reversed and the noting charges the holder had to pay are added back to the drawee's debt, since the drawee's default caused the expense. …

Dishonour reverses the effect of the acceptance: the Bills Receivable/Bills Payable account is closed out, and the debtor–creditor relationship is restored — but now increased by the noting charges the holder had to pay to get the dishonour formally certified, since the drawee's default caused that expense.

In the books of Sudha (Drawer/Holder)

In the books of Ramesh (Drawee/Acceptor)

Treating the noting charges as a loss in the holder's own books instead of adding them to the amount recoverable from the drawee; and omitting the separate Noting Charg …