Acceptance of Bill of Exchange in Accounting

 

1       Acceptance

What is acceptance in accounting?

When the drawee purchased goods from the drawer on credit, drawer draw bill of exchange in order to signed assent by the drawee. Hence drawee give acceptance to drawer, this is the meaning of acceptance in accounting.

Let simply understand by an example:

A is the seller selling furniture at $500. B wants to purchase the furniture but he could not pay immediately for some reason. A agree to sell furniture to B at $500 and along with interest on selling price @10%.  A draws the Bill of Exchange at 3 months to B for the amount and B give his assent on the bill of exchange. 

 

Journal Entry for Acceptance of Bill of Exchange 

1. In the Books of A's (Seller)

Bills Receivable     Dr.

  To B's A/c

2. In the Books of B's (Buyer)

A's A/c         Dr.    

      To Bills Payable A/c