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Founder of Accounting Education

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In previous lecture, I explained the discounting of Bill with bank. In that lecture, I told, if any person need money, he can discount his Bill receivable with bank. Now, in this lecture, I first told you the endorsement of bill. Endorsement of bill is also discount of bill receivable with any person instead of bank. If any person need money, he can discount his bill from the person who have the money and who have the trust on same person.

Definition of of Endorsement of Bill

Endorsement of bill means to sign on the back of bill for getting money on same bill or paying the debt of creditor. Sometime holder needs money before due date, he can transfer same bill to other by signing on it. A person who endorse the bill is called endorser and the person whom the bill is endorsed will be called endorsee.

Journal Entries of Endorsement of Bill

When Bill is Endorsed

If A who is holder of bill endorsed bill to B

In the books of A ( Endorser )

B Account Debit

Bill Receivable Account Credit

Logic : B is creditor of A. So, A reduced his liability to transfer his B/R. So, B account will debit because decrease the credit amount. B/R account credit because current asset has decreased.

In the Book of B

Bill Receivable Account Debit

A account Credit

Logic : B is happy because he has received his money of credit sold goods in the form of B/R. On maturity, this will convert in cash. So, it is increase in current asset. So, B/R will debit and there is decrease of his debtor asset. So, it will credit.

When Drawee pays the money

In the Books of B ( Endorsee)

Bank Account Debit

Bill Receivable Account Credit

Logic : On the maturity, b has received money from drawee. So, bank asset will increase and B/R asset will decrease. So, bank will debit and b/r will credit.

In the Book of  C ( Drawee )

Bill Payable Account Debit

Bank Account Credit

Logic : Drawee has decreased his current liability because he has bought goods from A on credit. So, today is maturity and he paid. So, his cash balance also decrease. Liability decreased. It means, B/p will debit. Asset decreased. It means, bank account credit.

Related Contents

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Accounting Education: Journal Entries for Endorsement of Bill
Journal Entries for Endorsement of Bill
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Accounting Education
https://www.svtuition.org/2018/07/journal-entries-for-endorsement-of-bill.html
https://www.svtuition.org/
https://www.svtuition.org/
https://www.svtuition.org/2018/07/journal-entries-for-endorsement-of-bill.html
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