Journal Entry for Dishonoured Bill Receivable

When a bill receivable is dishonoured, it means that the person who was supposed to pay the bill did not do so. In this case, the acceptor became insolvent, which means that they were unable to pay the bill. This situation requires a journal entry to be made to record the transaction.

1. Record the Dishonoured Bill Receivable

The first step in the journal entry is to record the dishonoured bill receivable. This is done by debiting the accounts receivable account for the full amount of the bill, which in this case is 3000.

Accounts Receivable 3000
To Bill Receivable 3000

2. Record the Loss

The next step in the journal entry is to record the loss that the firm has incurred as a result of the dishonoured bill receivable. This loss is recorded by debiting the loss account and crediting the bill receivable account.

Loss 3000
To Bill Receivable 3000

3. Reverse the Discount

If the bill receivable was discounted, the next step is to reverse the discount that was originally recorded. This is done by debiting the discount account and crediting the accounts receivable account.

Discount 50
To Accounts Receivable 50

4. Record the Insolvency

Finally, the insolvency of the acceptor needs to be recorded. This is done by debiting the bad debts account and crediting the accounts receivable account.

Bad Debts 3000
To Accounts Receivable 3000

Overall, the journal entry for a dishonoured bill receivable involves recording the dishonoured bill, the loss incurred, reversing any discounts, and recording the insolvency of the acceptor. It is important to keep accurate records of these transactions to ensure that the financial statements are accurate and up-to-date.

Bills receivable ac dr 3000
to bank ac 3000