Q.Sunitha received a bill of ₹8,000 accepted by Vinay. Sunitha owed ₹8,000 to her supplier, Ravi Kumar, and endorsed the bill to him in full settlement of that debt. On the due date, Vinay honoured the bill in the hands of Ravi Kumar. Journalise the endorsement in Sunitha's books and the honour in Vinay's books.

Endorsing a bill lets the holder settle a debt of the holder's own by simply transferring the bill; the acceptor's liability is unaffected and is discharged by paying whoever holds the bill on the due date. …

Endorsement lets the holder of a bill settle a debt of the holder's own, without waiting for the bill to mature and without needing any cash — the bill itself becomes the means of payment to a third party.

In the books of Sunitha (Endorser)

Only this one entry is needed in Sunitha's books: once endorsed away, the bill no longer belongs to Sunitha, so its eventual honour or dishonour in Ravi Kumar's hands does not touch Sunitha's books at all, unless it is later dishonoured, in which case Sunitha would again become liable to Ravi Kumar as an endorser.

In the books of Vinay (Drawee/Acceptor)

Vinay's liability does not change merely because the bill has been endorsed to someone else — he still owes the bill amount to whoever presents it on the due date.

Passing an unnecessary entry in Vinay's books at the point of endorsement, when in fact the drawee is unaffected until the due date; and crediting Bills Receivable in Sunitha's books with anything oth …