Sales Bill Discounting

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

03 November 2009 What are the entries which are to be passed when:
1. We go for bill discounting with a bank for our receivables.
2. The payment by the debtor is on time
3. When the same is delayed from the committed time

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Satpal Singh

Satpal Singh (Expert)
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03 November 2009
Suppose you are maintaining a current a/c in the SBI and selling your goods to ABC Limited, now you have discounted the bills from the SBI.
Then following entirs will be passed.
When bills are discounted
SBI C/A Dr.
To SBI Vendor Financing A/c
When payment is given on due date by customers
SBI Vendor financing A/C
To ABC Limited A/C

When payment is not given on due date.

SBI vendor financing a/c
To SBI Current A/c

Querist : Anonymous

Querist : Anonymous (Querist)

03 November 2009 what is the treatment for the bill discount charges charged by bank and interest on late payment by the debtor?

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Satpal Singh

Satpal Singh (Expert)
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04 November 2009 When interest is deducted on bills discounted by SBI

Bank Interest a/c Dr.
To SBI C/A A/c
When on due date payment is not given by purchaser and interest is charged by bank
ABC Ltd. A/c
To SBI C/A A/C