Question:
On 15th March, 2023 Y accepted a bill drawn upon him by X for four months for Rs. 10,000. X discounted the bill on 15th April, 2023 at 18% p.a. from his bank and Y met the bill on maturity. Give the Journal Entries in the books of X and Y.
On 15th March, 2023 Y accepted a bill drawn upon him by X for four months for Rs. 10,000. X discounted the bill on 15th April, 2023 at 18% p.a. from his bank and Y met the bill on maturity. Give the Journal Entries in the books of X and Y.
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When bills are discounted, the bank deducts interest in advance. Ensure the discount is recorded as an expense.
Updated On: Jan 13, 2026
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Solution and Explanation
The following journal entries will be recorded in the books of X and Y:
In the books of X:
| \(Date\) | Particulars | Debit (Rs.) | Credit (Rs.) |
|---|---|---|---|
| 15th March 2023 | Bills Receivable A/c Dr. To Y’s A/c (Being bill drawn and accepted by Y) | 10,000 | 10,000 |
| 15th April 2023 | Bank A/c Dr. Discount A/c Dr. To Bills Receivable A/c (Being bill discounted at 18% p.a. for 4 months) | 9,850 150 | 10,000 |
| 15th July 2023 | No Entry (Bill met by Y) | ||
In the books of Y:
| \(Date\) | Particulars | Debit (Rs.) | Credit (Rs.) |
|---|---|---|---|
| 15th March 2023 | X’s A/c Dr. To Bills Payable A/c (Being bill accepted in favor of X) | 10,000 | 10,000 |
| 15th July 2023 | Bills Payable A/c Dr. To Cash/Bank A/c (Being bill honored on maturity date) | 10,000 | 10,000 |
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