Home › CA Foundation › accounting › Bills of Exchange and Promissory Notes › If a bill discounted with bank is dishonoured, t…
If a bill discounted with bank is dishonoured, the entry debits:
ABank account in books
BBills Receivable account
CDiscount expense account
DDrawee / Maker account
Answer & Solution
Correct answer: D. Drawee / Maker account
1. Bank had previously credited the entity on discount; now it debits back on dishonour.
2. The original drawee/maker is debited (he is now liable to pay).
3. The credit is to Bank account (since bank already debited the entity).
_Source: ICAI BoS Foundation Paper 1, Ch 6 "Bills of Exchange", §4 dishonour_
Related questions
Stamp duty on a bill of exchange is paid by:Bills payable account in books of acceptor on acceptance is:Notice of dishonour is required for:Difference between Bill of Exchange and Promissory Note: in PN the maker is the:Drawer A receives bill from drawee B and endorses to creditor C. On dishonour:Insolvency of drawee on a bill leads drawer to:Noting charges paid by bank on dishonour are ultimately borne by:Retirement of a bill before due date means: