Page 288 - VIRANSH COACHING CLASSES

accepted by him will obviously be dishonoured. In this case entry for cancellation of bill will be
passed in the books of Drawer and Drawee. Drawer may receive some amount from the Drawee’s
estate which is called final dividend. The amount which is not recoverable will be written off in the
books of Drawer as bad debts. The same amount will appear in the books of Drawee as deficiency.

Accounting Treatment in the Books of Drawer and Drawee :

Transaction Books of Drawer Books of Drawee
1 Cancellation of old bill Drawee’s A/c Dr. Bill Payable A/c Dr.
To Bills Receivable A/c or To Drawer A/c
To Bank A/c or (Being our acceptance can-
To Bill sent for collection celled)
A/c or
To Endorsee’s A/c
(Being old bill cancelled)
2 Receiving final Cash / Bank A/c Dr. Drawer’s A/c Dr.
dividend and bad debts Bad Debts A/c Dr. To Cash / Bank A/c
written off To Drawee’s A/c To Deficiency A/c
(Being final dividend received (Being final dividend paid
and bad debts written off) and balance credited to
deficiency account)

Illustrations

1. (Honour of bill under different circumstances)
Akash drew a bill on Deepak for 25,000 on 23 December, 2019, for 3 months. Deepak accept-
rd
ed the same and returned it to Akash. On the due date the bill was duly honoured by Deepak.
Give journal entires in the books of Akash and Deepak under each to the following cases :
a) If Aksah retained the bill till maturiry.
b) If Akash discounted the bill with the bank at 6% p.a. on the same day.
c) If Akash sent the bill to bank for collection on 23 December, 2019.
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d) If Akash endorsed the bill to his creditor Viren.

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