Bills Receivable Book and Bills Payable Book in Subsidiary Book

 

Bills Receivable Book and Bills Payable Book

Bills receivable and account receivable is concerned with credit sale of goods and service revenue.

When goods sold on credit:

The seller becomes vendor, suppler or creditor.

The buyer becomes purchaser, customer or debtor.

 

When goods sold on credit without guarantee (without bill of exchange), debtor or customer is debited.

When goods sold on credit with guarantee (with bill of exchange), bills receivable or account receivable is debited.

 

Seller writes bill of exchange and sends for the acceptance to the buyer; then buyer accepts that bill.

After accepting the bill, such written document becomes bills receivable for seller and bills payable for buyer.

 

The buyer will pay the amount of bills payable after some days or months.

Generally, the maximum due date of a bill is 90 days; grace days are 3 days.

 

When firm receives many bills receivable, then firm records them in a separate bills receivable book.

When firm has to pay many bills payable, then firm records them in a separate bills payable book.

 

Bills receivable book contains receipt date, name of drawee, term, due date, LF, amount and remark.

Bills payable book contains acceptance date, name of drawer, term, due date, LF, amount and remark.

The format of the bills receivable book and bills payable book are given below:

 

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Accounting Equation	http://tiny.cc/c89jkz
Basic Journal Entries in Nepali	http://tiny.cc/uaakkz
Basic Journal Entries	http://tiny.cc/8aakkz
Journal Entry and Ledger	http://tiny.cc/caakkz
Ledger Account	http://tiny.cc/haakkz
Subsidiary Book	http://tiny.cc/399jkz
Cash Book	http://tiny.cc/889jkz
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Bank Reconciliation Statement (BRS)	http://tiny.cc/q59jkz
Depreciation	http://tiny.cc/ugakkz
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Analysis of Financial Statement	http://tiny.cc/slersz

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Parties of bills of exchange

There are three parties to a bills of exchange; drawer, drawee and payee.

(a) Drawer or maker

Drawer is the person who sells goods and services on credit and draws a bill.

In simple words, creditor (seller) is the drawer of a bill.

 

(b) Drawee or acceptor

Drawee is the person purchases goods and services on credit and accepts a bill.

The debtor (buyer) becomes drawee after signing the bill of exchange.

 

(c) Payee

Payee is a person to whom the payment of bill is to be paid.

The payee is the third party or the drawer himself.

 

Bills receivable and bills payable books record bills accepted by customers and suppliers date-wise,

 

Bills Receivable Book

(In the book of drawer)

SN	Receipt date	Received from   (Drawee)	Term	Due date	LF	Amount	Remark
1
2
3

Note: it is general format; it may vary according to need.

 

Bills Payable Book

(In the book of drawee)

SN	Acceptance date	Acceptance given (Drawer)	Term	Due date	LF	Amount	Remark
1
2
3

Note: it is general format; it may vary according to need.

 

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Currency of your country  

PROBLEM: 5A

The following extracted information given by DK Traders for the month of August 2019:

Bills receivable:

August 1, Bill acceptance received from AK Traders of Rs 20,000 for 2 months.

August 15, Bill acceptance received from GB Suppliers of Rs 40,000 for 3 months.

August 18, Discounted bill of AK Traders at Rs 19,600 from Nabil Bank.

August 19, Acceptance received from RK Impex of Rs 60,000 for 2 months.

Bills payable:

August 5, We accepted bill of BL Traders of Rs 80,000 for 3 months.

August 20, Our acceptance to MK Suppliers of Rs 30,000 for 2 months.

Required: (a) Bills receivable book; (b) Bills payable book

[Answer:  (a) Total 100,000; due date = 4 Oct; 18 Nov; 22 Oct

 

Bills Receivable Book

in the book of DK Traders 

SN	Receipt date	Received from	Term	Due date	LF	Amount	Remark
1	1 Aug	AK Traders	2m	4 Oct		20,000*	discounted
2	15 Aug	GB Suppliers	3m	18 Nov		40,000
3	19 Aug	MK Suppliers	2m	22 Oct		60,000
	Total					100,000*

 

Keep in mind

Discounted bill is not adjusted in total bills receivable*
1 August + 2 months = 1 October 1 October + 3 grace days = 4 October	15 August + 3 months = 15 November 15 November + 3 grace days = 18 November
Calculate other due date as above example. If you face any difficulty, comment on comment box

 

Bills Payable Book

in the book of DK Traders 

SN	Acceptance date	Acceptance given (Drawer)	Term	Due date	LF	Amount	Remark
1	5 Aug	BL Traders	3m	8 Nov		80,000
2	20 Aug	MK Suppliers	2m	23 Oct		30,000
	Total					110,000

 

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Currency of your country  

PROBLEM: 5B

On 1 Jan 2020, Deepak sold goods to Binita for $/₹/Rs 40,000 on credit and draw a bill for 3 months. Binita accepts the bill. On maturity bill met payment.

Required: (a) Journal entries in the book of drawer (Deepak) and Bills receivable book.

(b) Journal entries in the book of drawee (Binita) and Bills payable book.

[Answer:  due date 4 April]

SOLUTION

Journal Entries

In the book of drawer (Deepak)						In the book of drawee (Binita)
Goods sold						Goods purchases
Date	Particulars		$/₹/Rs	$/₹/Rs		Date	Particulars		$/₹/Rs	$/₹/Rs
1 Jan	Binita	Dr	40,000			1 Jan	Purchase	Dr	40,000
	To Sales			40,000			To Deepak			40,000
	(Being: goods sold)						(Being: goods purchased)

.

Accepted bill received						Acceptance of bill
Date	Particulars		$/₹/Rs	$/₹/Rs		Date	Particulars		$/₹/Rs	$/₹/Rs
1 Jan	B/R	Dr	40,000			1 Jan	Deepak	Dr	40,000
	To Binita			40,000			To B/P			40,000
	(Being: bill received)						(Being: bill accepted)

.

On maturity period						On maturity period
Date	Particulars		$/₹/Rs	$/₹/Rs		Date	Particulars		$/₹/Rs	$/₹/Rs
4 Apr	Bank	Dr	40,000			4 Apr	B/P	Dr	40,000
	To B/R			40,000			To Bank			40,000
	(Being: amount received)						(Being: amount paid)

 

Maturity Period

Bill accepting	1 Jan 2020		Bill accepting	1 Jan 2020
Add: Period of bill	3 months		Add: Period of bill	3 months
Due date	1 Apr 2020		Due date	1 Apr 2020
Add: 3 days of grace	3 days		Add: 3 days of grace	3 days
Maturity period	4 Apr 2020		Maturity period	4 Apr 2020

 

Bills Receivable Book

(In the book of Deepak)

SN	Receipt date	Received from	Term	Due date	LF	Amount	Remark
1	1 Jan	Binita	3m	4 Apr		40,000
	Total					40,000

 

Bills Payable Book

(In the book of Binita)

SN	Acceptance date	Acceptance given (Drawer)	Term	Due date	LF	Amount	Remark
1	1 Jan	Deepak	3m	4 Apr		40,000
	Total					40,000

********

PROBLEMS  AND  ANSWERS

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Currency of your country  

PROBLEM: 5A

Sanjay Medical Depot has following extracted information in the year 2020:

Jul 1, Acceptance received from Nirmal Medicals for $/₹/Rs 500,000 payable after 3 months.

Jul 20, Acceptance given to Shailaja Pharma bill for Rs 300,000 payable after 3 months

Jul 31, Acceptance received from Faisal Medicos for Rs 100,000 payable after 60 days.

Aug 5, Pfyzer Biopharma bill for Rs 100,000 payable after 180 days accepted.

Aug 11, Arya Pharma acceptance for Rs 70,000 payable after 90 days received.

Aug 31, Discounted Bill of Nirmal Medicals from State Bank at rebates Rs 5,000.

Required: bills receivable book and bills payable book

[Answer:  Total B/R = 170,000; Due date 4 Oct, 2 Oct, 12 Nov;

Total B/P = 400,000; Due date 23 Oct, 8 Feb]

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Currency of your country  

PROBLEM: 5B

On 1 August 2019, Dinesh sold goods to Anita for $/₹/Rs 75,000 on credit and draw a bill for 2 months. Anita accepts the bill. On maturity bill met payment.

Required: (a) Journal entries in the book of drawer and bills receivable book;

(b) Journal entries in the book of drawee and bills payable book.

[Answer:  due date 4 October]

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