Retiring of Bill Video Lecture | SSC CGL Tier 2 - Study Material, Online Tests, Previous Year

we will not discuss another small topic
called retirement of their retirement
off of them
what is the retiring of a bill it is
early payment of them so if a bill has
been taken a bill is for three months
and give after two months the data wants
to pay up the money he can do so but
usually he would also expect one month's
interest since he is paying the money
one month before the due date so
retiring of a bill is nothing but an
early payment and normally when there is
early payment there is an interest
element involved which is called
a rebate on the bills retired rebate on
the bills retired the rebate is computed
for the remaining period of the bill
rebate is computed on the remaining
period of the bill because he is making
the payment that much early so he gets a
benefit what would be the journal
entries in our example in the books of
eggs in the books of drawer in the books
of the person who is to receive the
payment where there is a bill receivable
usually when the bill is honored the
entry is gashicon debit to Bill's
receivable now when the cash is received
the entire amount is not received let us
say out of ten thousand two hundred
rupees is the rebate involved so what
would be the entries in the books of X
so to say where this receivable was
their money comes in cash account debit
only nine thousand eight hundred the
rebate may be recorded as discount
account debit two hundred two bills
receivable
similarly in the books of why that is in
the books of the acceptor
in the books of the person which is a
bills payable he gets a discount he gets
a rebate rebate is an income for him
what would be the entry when he needs
payment on the bills payable
he pays out cash so it would be this
payable account David let's say the
amount is ten thousand two he would get
the benefit of a rebate a rebate of two
hundred to cash or bank what he pays up
is only nine thousand eight hundred so
this would be the scheme of entries the
bed is an income in the books of the
person who is retiring the bill only who
is paying upon the book on the bill
early a small example round cells could
still a him on 1st April twenty thousand
draws a bill on the same day three
months accepted by the him but Rahim
retires the bill on 4th June rebate
being at the rate of 12 percent per
annum past journal entries in the books
of RAM and Rahim in the books of both
Ram and Rahim okay in the books of let's
first two round sells goods and three is
Raheem's account debit to sales an
amount is twenty thousand next Barrett
is accepted ROM draws a bill and the
bill is accepted so bills receivable
account debit during again this is
twenty thousand it is assumed that the
date of both these transactions is first
if Rahim retires the bill on fourth Chu
it is 1st April 3 months bill 1st April
1st May 1st June 1st July Plus 3 days
2nd 3rd and 4th 4th July was the doodied
but he retires the bill on 4th June
therefore he is entitled to a rebate for
one month one month rebate one month
rebate which month from 4th June 2 for
July 1 month read it so what would be
the entry on 4th June money is received
by LOM say bank account debit but how
much money 12% interest on 20000 for 1
month it should be 200 rupees repeat so
bank account
19800 only discount account debit 202
bills receivable 20000 this is how it
would be in the books off Rahim sorry in
the books of flop this is this would be
the entries in the books of rough what
about the entries in the books of rain
in the books of Rahim really makes a
purchase so purchases account debit to
Dom's account 20000 so what was sales
there is purchase here next Rahim
accepts a bill of exchange and gives it
to wrong therefore Rams account debit to
Bill's payable so what was receivable
did his bills payable here on the same
date then on 4th June Rahim pays how
much does he pay only 19,800 what would
be the entry he pays it against the bill
therefore cancel the bill bills payable
account debit 20,000 but the amount of
cash that he pays to Banford say he
gives a check 19800 to rebate on this
discounted would be 200 this is how
entries would be passed in case of
retirement of death