Endorsement of bill of exchange

Endorsement means Negotiating the right on such bill to other person to whom we are Due or Liable to Pay some amount.

For Eg Let Take "X is a Debtor for Rs 1000 to Y and Z is creditor to Y  for same amount ".

Now X draws a Bill to Y stating Term And then Y endorse it to Z so that till the Bill becomes due Y is relived  from debt and X wil pay that amount to Z,If X Fails then Y has to Pay such amount to Z.

Entry wil be

1. On drawing the Bill

Bill rec A/c Dr 1000/- to X A/c 1000/-

2. When Endorsement

Z A/c 1000/- to Bill Rec A/c 1000/-