Bill of Exchange Test - 8

why cash debited? - since at the time of maturity drawer has received the cash hence increase in cash(asset) debited.
why bill receivable credited? - since the Bill has matured, as a result, bill receivable (asset) reduced. hence bill receivable credited.

why bill payable debited? : since at the time of maturity bills payable (liability) will reduce in the books of Manik hence bills payable is debited.
why cash credited? : since at the time cash will be paid to Naman, as a result, cash will reduce in the books of Manik hence cash is credited.

when the bill is discounted with the bank is dishonoured the journal entry will be:

drawee A/C                                  Dr                   12020

    To bank A/C                                                           12020 

(being bill dishonoured and amount paid to bank)

hence, B's bank balance will be deducted by the bill amount and noting charges, i.e, 12020.

why A's A\C debited? = because of cancellation of bill A's liability will be ceased. hence A's A/C is debited.

why bill receivable credited? = because of cancellation of bill recevable will reduce in the books of B. hence bill receivable is credited.

why bill receivable debited? = since a new bill is issued, as a result, bill receivable is increased. hence bill receivable is debited.
why A's A/C is credited? =   since a new bill is issued, as a result, A's liability as a creditor is ceased. hence A's A/C is credited.

if a bill is discounted with the bank and is dishonoured, the journal entry will be;

Y's A/C             Dr                      20,000

        To Bank A/C                                  20,000

(being bill dishonoured)