Home > Topics > Financial Accounting II > Accounting in Drawer's Books

Accounting in Drawer's Books (Seller) 📔

The Drawer is the person who receives the bill (Asset). We call it Bills Receivable (B/R).

Standard Journal Entries 📝

1. When Goods are Sold

Drawee A/c  ...Dr.
    To Sales A/c
(Being goods sold on credit)

2. When Bill is Drawn and Accepted

Bills Receivable A/c  ...Dr.
    To Drawee A/c
(Being acceptance received)

3. On Due Date (If Bill is Met/Honoured)

Cash / Bank A/c  ...Dr.
    To Bills Receivable A/c
(Being cash received against bill)
Why credit Drawee?

In Entry 2, we credit the Drawee because he is no longer our Debtor. The "Debt" has been converted into a "Bill". Now the Bill is our Asset, not the person.

Example 🍎

Raj sells goods to Simran for ₹10,000. Draws a bill. Simran accepts. On due date, Raj gets money.

In Raj's Books:

  1. Simran Dr. 10,000 | To Sales 10,000
  2. B/R A/c Dr. 10,000 | To Simran 10,000
  3. Cash A/c Dr. 10,000 | To B/R A/c 10,000

Quiz Time! 🎯

Test Your Knowledge

Question 1 of 5

1. For the Drawer, the bill is a:

Liability
Expense
Asset (Bills Receivable)
Loss

💡 Final Wisdom: "The journey is: Goods -> Debtor -> Bill -> Cash. The circle of life in accounting!" 🦁

Next up: Accounting in Acceptor's Books - The Buyer's side! 🧾

← PreviousNext →