When consignee accepts a bill we credit it to the consigne's a/c as " by bills receivable" what would happen when the bill is dishonoured? What entry would the consignor pass?
The entry for B/R accepted by consignee drawn by consignor Is B/R a/c ....Dr To consignee a/c (Being B/R received from consignee) Later this advance will be adjusted from the amount receivable from consignee. If bill is dishonoured, the entry will be reversed Consignee a/c ... Dr To B/R a/c (Being bills receivable dishonoured) There will be no amount remaining to be adjusted from amount receivable from consignee. Consignee will no more be as a creditor in the books B/R will be ceased to exist hence it's account will not appear in the books. Hope it helps!!!