Question
Mr. A draws a bill of exchange for ₹1,00,000 on Mr. B
for 90 days. Mr. B accepts it and it is discounted by Mr. A from the bank. On maturity, Mr. B fails to pay. Who bears the financial loss, and how is the accounting entry passed?Solution
On dishonour, the drawer reinstates the receivable. Entry: Mr. B A/c Dr. To Bank A/c → Mr. A bears the financial loss until recovery.
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