This process is know as discounting of a bill of exchange.
Its treatment is same i win games free download software as we do in the case of Interest Received in Advance.
To Rebate on Bills Discounted A/c.On the due date, Rahul paid the required amount.Give journal entries in the books of Rohit, Ankit and Shakul.During 2004-05 ABC Bank Ltd.
Anup got the bill and discounted at 12 per annum at his bank.
8,000 plus interest as agreed between both the parties of the bill.
The discount portion usually depends upon the prevailing rate of interest and the unexpired period of the bill.
20,000 may be cancelled on cash payment.
Had a balance.Note that the drawee pays full amount of the bill to the bank at the time of maturity but bank pays face value less discount to the drawer when drawer discounts the bill with the bank.In the books of B, Bills Payable A/c is to be debited (being decrease in liabilities) and Cash A/c is to be credited (being decrease in assets).(Dishonour of bill) Mohan Bhai sold goods for Rs 25,000 to Jamshedji on Jan.Method of Computation of Rebate on Bills Discounted : For example, a customer discounts a bill.5, 00,000 having a covering for the same through bills worth.In the books of C, Cash A/c is to be debited (being increase in assets) and Bills Receivable A/c is to be credited (being decrease in assets).The following journal entries are passed in the books of both the parties: Illustration.Failure to meet the commitment means the acceptor could not pay the amount of the bill to the holder of the bill on its maturity.When the acceptor of a bill of exchange is a reputable person the bill is as good discount tire company wenatchee as money, and any bank will discount.