Question

On 1^st January, 2023, X sold goods to Y for Rs. 50,000. On the same date X drew a bill on Y for Rs. 50,000 due after three months. Y accepted the bill and returned it to X. X retained the bill till the due date, and Y met the bill on due date. Pass journal entries for the above transactions in the books of X.

Hint:

Bills receivable are treated as assets in the books of the drawer and are honored when paid by the drawee on the due date.

Answer 1

The following journal entries will be recorded in the books of X:

\(Date\)	Particulars	Debit (Rs.)	Credit (Rs.)
1st Jan 2023	Y’s A/c Dr. To Sales A/c (Being goods sold to Y on credit)	50,000	50,000
1st Jan 2023	Bills Receivable A/c Dr. To Y’s A/c  (Being bill accepted by Y and retained by X)	50,000	50,000
1st April 2023	Cash/Bank A/c Dr. To Bills Receivable A/c  (Being bill honored by Y on maturity date)	50,000	50,000