Sindhuja Sivaraman (Student) (115 Points)
04 February 2023Hello,
How the rebate on bills discounted is known as discount not earned but received in advance?
At the end of FY, the banks having numerous unmatured bills. Then, the rebate on such bills are only earned but not received. Isn't it?
Please clarify.
prasad Nilugal
( GST Practitioner & Accounts )
(14801 Points)
Replied 04 February 2023
Yes, Correct unexpired portion of such discount is carried forward to next financial year, by debiting Rebate on Discount Bills A/c and crediting Discount on bills , latter the account shown on Asset side of Balance sheet of the Bank , in the next F.Y account will be closed and transfer to the Discount on Bills A/c ,
Sindhuja Sivaraman
(Student)
(115 Points)
Replied 04 February 2023
Thank you for your reply.
Is it like an accrued income?
prasad Nilugal
( GST Practitioner & Accounts )
(14801 Points)
Replied 04 February 2023
Sindhuja Sivaraman
(Student)
(115 Points)
Replied 04 February 2023
Then it is an asset for the bank.
Why it is showed on liability side?
Please clarify.
prasad Nilugal
( GST Practitioner & Accounts )
(14801 Points)
Replied 04 February 2023
No , I have corrected above in my first reply as Asset side .
Yasaswi Gomes new
(Finance )
(4514 Points)
Replied 04 February 2023
If it shows on liability, it is deferred liability.
Sindhuja Sivaraman
(Student)
(115 Points)
Replied 04 February 2023
When it shows liability?
It is an asset to the bank not yet received
Please explain how it is a liability?
Sindhuja Sivaraman
(Student)
(115 Points)
Replied 06 February 2023
Thank you for your reply.
Please tell me the entry for recording the rebate on bills discounted.
prasad Nilugal
( GST Practitioner & Accounts )
(14801 Points)
Replied 06 February 2023
Sindhuja Sivaraman
(Student)
(115 Points)
Replied 06 February 2023
Thank you sir.
But in my book this is given as exactly opposite as income received but not earned and the entry given is reversed.
Hereby attached the image.
Please check and confirm which is correct
Thank you
prasad Nilugal
( GST Practitioner & Accounts )
(14801 Points)
Replied 06 February 2023
Sorry madam, when Bank discount the bill , we received Income in advance , bill amount along with rebet earn for example bill of Rs 10000/- collected by the Bank in this 10000/- discount earned rs 250 , so this 250 received in Advance which of next year therefore it's Liability, please correct and reverse entity we have to pass . above entry is incorrect ones again sorry for wrong entry .
so correct entry is
Discount on bill A/c Dr
To Rebet on Discounted bills A/c Cr
( Discount received Received in advance )
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