alleryIf 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_
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