Journal Entry for Acceptance of X to Y Y in Account Current with X

When a business receives acceptance of account current from a debtor, it implies that the debtor acknowledges the correctness of the accounts and promises to pay the amount due. The following journal entry is made in such a case:

Step 1: Determine the Amount Due
Before making the journal entry, the amount due from the debtor must be ascertained. It may include principal, interest, and other charges.

Step 2: Debit the Debtor's Account
The debtor’s account is debited to record the amount due, and the acceptance of the debtor is recognized.

Step 3: Credit the Acceptance Account
The acceptance account is credited to record the acceptance of the debtor.

Step 4: Credit the Discount Allowed Account
If the debtor has agreed to pay the amount due before the due date, a discount may be allowed. The discount allowed account is credited to record the discount.

The journal entry for the acceptance of account current is as follows:

Debtor A/C Dr.
To Acceptance A/C
To Discount Allowed A/C (if applicable)

Explanation: The above journal entry debits the debtor’s account to recognize the amount due and credits the acceptance account to acknowledge the debtor's acceptance. If a discount is allowed, the discount allowed account is credited. The acceptance of account current is an essential document that confirms the debtor's agreement to pay the amount due, which serves as evidence in case of a dispute.

Bills payable a/c Dr.
to x a/c