Bill of Exchange Test - 3

if an endorsed bill is dishonoured, the liability of drawee will be restored( since he has not made payment to endorsee) and liability to endorsee(since endorsee has not received the payment) will also be restored. the journal entry is:

             drawer                   DR

                  To endorsee

   ( being endorsed bill is dishonoured)

since the journal is a book of original entry because a transaction is first recorded in the journal then it is transferred to the ledger. hence the origin of bill receivable book is the journal.

in the case of renewal of bill, if the acceptor doesn't pay interest then it will be included in the amount of the bill.

ASSETS- An asset is a resource controlled by an entity as a result of past events and from which future economic benefits are expected to flow to the entity.

              since bills receivable results in a future economic benefit to the entity hence it is an asset. it is shown as an asset on the balance sheet. 

Sometimes, the drawee shows his inability to pay the amount of bill before the date of maturity, in such cases, he requests the drawer to renew the bill.

if the due date of a bill falls on a day which is a public holiday the due date of the bill shall be the presceding business day.

fee paid to the notary public is charged by the holder of the bill from drawer or any of the previous endorser. noting charges is paid for noting and protesting the bill of exchange of its dishonour.

payee means the person named in the bill and to whom payment is to be made. in the given case, Sahil shall make payment to Rakesh. hence, Rakesh is the payee.

noting charge is paid by the drawer to the notary public just to get the evidence of dishonour but subsequently, it is recovered from the draweer.

the person to whom the bill is endorsed is called endorsee.