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CCP302
CCP302
ANDHRA PRADESH
Name of the staff member: Sreenivasa Rao B.
Designation : Lecturer in CCP
CCP-302 - 39 & 40 2
Recap
In the previous class, we have discussed the
CCP-302 - 39 & 40 3
I. When a Bill is discounted
Cash is required for day to day running of the
business, many businessmen do not keep their
bills with them till the date of maturity
When the drawer or holder of a bill wants to get
the money before maturity he can sell the same to
his bank. This process is called discounting of the
bill
The banker will deduct some amount, known as
discount from the bill and the balance amount will
be credited to the drawer’s / holder’s: a/c
CCP-302 - 39 & 40 4
For example: A bill for Rs. 3000/- for 4
months is discounted at 6 % per annum then
discount = 3000 X 6/100 X 4/12 = Rs. 60/-
∴ Discount is Rs. 60/-
The payment to a Drawer / holder
is Rs. 3000 – 60 = Rs. 2940/-
It the bill is discounted two months after its
acceptance then:
discount= 3000 X 6/100 X 2/12 = Rs. 30/-
The payment value is Rs. 3000 – 30 = Rs. 2970/-
CCP-302 - 39 & 40 5
The following are the Journal entries will be recorded in the
Books of Drawer and Drawee when the bill is got discounted
with the banker.
Sl.
Transaction In the Books of Drawer In the Books of Drawee
No.
Bills Receivable A/c Dr
When bill was Drawer A/c Dr
To Drawee’s A/c
I received by drawer To bills payable A/c
from the Drawee [Being acceptance
[Being acceptance given]
received]
Bank A/c Dr
Discount A/c Dr
When the bill was
2 To bills receivable A/c No entry
discounted
[ Being bill discounted
with bank]
Bills payable A/c Dr
When the bill was
To cash A/c
3 honoured on No entry
maturity date [ Being payment of bill
made on due date]
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Problem
CCP-302 - 39 & 40 7
Solution:
Journal of X
Dr. Cr.
Date Particulars L.F. Amount Amount
Rs. Rs.
Dr. Cr.
L
Date Particulars Amount Amount
.F.
Rs. Rs.
CCP-302 - 39 & 40 9
III. Endorsement of Bill:
Endorsement means it is an act of signing the
bill on its back by the maker or holder thereof for
paying to his creditor
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Entries in the books of Drawer, Drawee and Endorsee
In the books of
Item
Drawer Drawee Endorsee
Bills receivable A/c
Drawee A/c Dr.
Dr
When bills To bills payable
To Drawee’s A/c No Entry
received [Being the bills
[Being bills received
payable accepted]
from Drawee]
Bills receivable A/c
Dr.
When bills Endorsee A/c Dr.
To Drawer’s A/c
are To bills Receivable No Entry
endorsed A/c [Being the receipt of
duly endorsed bill
from drawer]
When the Bills payable A/c
Cash A/c Dr.
bill was Dr.
To bills receivable
honoured To cash A/c
No entry A/c
on [Being bills
maturity [Being cash received
honoured on
date on maturity]
maturity date]
CCP-302 - 39 & 40 11
Problem:
Dr. Cr.
Date Particulars L.F. Amount Amount
Rs. Rs.
1.7.07 Purchase of A/c Dr 3,000
To Bat & Co., A/c 3, 000
[Being goods purchased form Bat
& Co.]
Bat & Co., A/c Dr 3,000
To bills payable A/c 3,000
[Being acceptance given to Bat &
4.10.07 Co., ]
Bills payable A/c Dr. 3,000
To cash A/c 3,000
[Being payment mode on dueCCP-302 - 39 & 40 14
date]
Journal of Sarath & Co.,
Cr.
Dr. Amoun
Date Particulars L.F. Amount t
Rs.
Rs.
1.7.07 Bat & Co., A/c Dr 3,000
To sales A/c 3, 000
[Being goods sold to Bat &
1.7.07 Co.]
Bills receivable A/c Dr 3,000
To Bat & Co A/c 3,000
[Being the bill received duly
4.10.0 endorsed by Bat & Co., ]
7 Cash A/c Dr. 3,000
To Bills receivable A/c 3,000
[Being cash received on CCP-302 - 39 & 40 15
maturity]
• Bills sent to the bank for collection.
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When a bill is sent to bank for collection , bank a/c
is not debited by the Drawer because bank does
not become his debtor
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Quiz
c) 4 days
d) 3 days
e) 5 days
f) 7 days
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2. Name of the person who draws a bill of exchange.
b) Drawer
c) Endorser
d) Debtor
e) Payee
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3. Name of the person to whom the bill is made
payable.
b) Payee
c) Creditor
d) Drawer
e) None
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Assignment
1. On 1.5.07 Prasad sold goods worth Rs. 3000/- to
chandra and draw upon the later a bill for the
amount payable three months after date.
Chandra duly accepted the bill
***
CCP-302 - 39 & 40 27