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bills for collection a/c doubt.

sp (conf) (76 Points)

17 May 2009

in padhuka's accounts book-pg 21.30 qs. 15 on accounting for banking companies, bills for collection a/c,

- why is bills for collection a/c both asset and liab!!?!??!??!?!?!

I don't understand. kindly clarify.

(PS- unless u dont have the bk-

Q- From the fol details , prepare bills for colctn (asset) a/c and bills for collectn(liab) a/c

on 1.4.05, bills for collection were Rs. 51Lakhs, durin 05-06, bills recd for collection amounted to, Rs. 75L. Bills collected during the yr Rs 98,47,000. Bills Dishnd and returned during the yr- 27,10,000.)

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3 Replies

CA CS CMA Srinivasan N (ACA, ACS, CWA Inter) (1172 Points)
Replied 17 May 2009

Hello Friend,

Let me give you an example. Suppose Company A has given Bill Of Exchange to Company B for Rs.20000. And take another case where Company C has given Bill of exchange to Comany A for Rs.50000. In this case suppose Company A had account with Indian Bank. Now A will present the bill to bank for collection of Rs.50000/-

And the Company B would have presented the bill of Rs.20000 to his bank for collection from Company A which again comes to Indian Bank.

Now in the books of Indian Bank, there is a bill for collection(Asset) Rs.50000 and there is a bill for collection(Liability) of Rs. 20000/-. Thus the accounts are evolved and the settlement is dine ultimately for the bill amount.

If you are still unclear you may mail me at srini.ca @ gmail.com

Rgards