Sale bill discounting vs. purchase bill discounting

This query is : Resolved

VIKASH KUMAR JAIN (Querist)
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15 January 2016 Please provide the treatments for Sale bill Discounting and purchase bill Discounting with bank by the company.

Arpit Shah

Arpit Shah (Expert)
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16 January 2016 Invoice discounting is a form of short-term borrowing often used to improve a company's working capital and cash flow position. Invoice discounting allows a business to draw money against its sales invoices before the customer has actually paid.

Arpit Shah

Arpit Shah (Expert)
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Saket Jain

Saket Jain (Expert)
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26 January 2016 Bill Receivable A/c Dr.
To Debtor A/c
(On Acceptance of Bill by Drawee)

Bank A/c Dr
Discount Charges Dr
To Bills Receivable
(Bills discounted At Bank)

In Books of Drawee
Creditor A/c Dr
To Bills Payable
(On acceptance of Bill)

Bills Payable A/c Dr
To Bank
(On Presentation and payment to bank)