Why do we debit the drawee's a/c when the bill is dishonoured or cancelled and also when interest on renewed bill is charged from him
journal:
drawee a/c dr
To interest a/c
we credited the interest a/c as it is an income, but why do we debit him???
debit="the reciever", but here he is the giver right!!
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Bills of exchange
Replies (2)
In this case drawee is actually receiver of service i.e. we allow him excess credit period.
Subsequently when he pay cash then he becomes giver.
Subsequently when he pay cash then he becomes giver.
good clarification and information
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