rebate on bills discounted account is a

Method of Computation of Rebate on Bills Discounted : For example, a customer discounts a bill.
So, actual income.This process is know as discounting of a bill of exchange.Drawer discounted the discount office furniture memphis tn bill for 9,750 and suffered a loss of 250.306 (i.e., 907.(ii) Commissions earned will be credited to P L A/c whereas customers liability for acceptance will appear on the asset side of the Balance Sheet and Acceptance on behalf of customer will appear in the liability side as contra items, and (iii) Loans and advances.30,000 for 3 months at 12 on 1st March 2000, it will be calculated as under: Bank will earn discount @ 12 for 92 days.e.,.Cash A/C.XXX, b/R A/C.XXX (Cash received from acceptor equal to full value of the bill).Illustration 2: As on 31st December 2000, the books of the Hercules Bank include, among others, the following balances: Throughout 2000, the Banks rate for discounting has been 18 and the rate of commission on bills for collection,.
But this amount of discount is meant for March, April and May.Note that the drawee pays full amount of the bill to the bank at the time of maturity but bank pays face value less discount to the drawer when drawer discounts the bill with the bank.5,00,000 having a covering for the same through bills worth.Definition and Explanation of Discounting a Bill: If the drawer of the bill does not want to wait till the due date of the bill and is in need of money, he may sell his bill to a bank at a certain rate of discount.As accounts are prepared on 31st March each year, discount received for 61 days (30 31) for April and May is not actually earned.Home, accounting for Hospitals (With Accounting Entries).This is called a contingent liability - a liability that will only arise if a certain event occurs - the acceptor does not honor the bill.It is never easy to accurately predict when your customers will pay.On investigation and analysis, the average due date for the bills discounted and purchased is calculated as 15th February 2001 and that for bills for collection as 15th January 2001.When a bill is discounted by the holder, the following entries are passed in the books of drawer, drawee and bank: When the bill is drawn by the drawer (A) and accepted by drawee (B).