Dishonour of a Bill – Bounced! ❌

Definition: When the Drawee fails to pay on the due date, the bill is Dishonoured.

What happens next?

1. The holder (Raj) goes to a Notary Public (Lawyer).
2. The Notary records the refusal officially. This is called Noting.
3. The Notary charges a fee called Noting Charges.
4. Who pays Noting Charges?
   • Initially: The Holder pays (to the Lawyer).
   • Ultimately: The Drawee must bear it (because it was his fault).

Journal Entries (In Drawer's Books) 📝

Logic: Reverse the original entry + Add Noting Charges. We make the Drawee our Debtor again.

1. If Bill was Retained:

Drawee A/c  ...Dr.  (Bill Amount + Noting Charges)
    To Bills Receivable A/c  (Bill Amount)
    To Cash A/c              (Noting Charges paid)

2. If Bill was Discounted:

Drawee A/c  ...Dr.  (Total)
    To Bank A/c             (Total)
(Bank takes money from Drawer's account)

3. If Bill was Endorsed:

Drawee A/c  ...Dr.  (Total)
    To Endorsee A/c         (Total)

Quiz Time! 🎯

💡 Final Wisdom: "Dishonour is bad for reputation. It's like a bounced cheque. It also adds extra cost (Noting Charges) to the defaulter." 📉

Next up: Renewal of Bills - Giving a second chance! 🔄