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Rebate on bills discounted.

Sindhuja Sivaraman (Student) (115 Points)

04 February 2023

Hello,

How the rebate on bills discounted is known as discount not earned but received in advance?

At the end of FY, the banks having numerous unmatured bills. Then, the rebate on such bills are only earned but not received. Isn't it?

Please clarify.

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16 Replies

prasad Nilugal ( GST Practitioner & Accounts ) (14163 Points)
Replied 04 February 2023

Yes, Correct unexpired portion of such discount is carried forward to next financial year, by debiting Rebate on Discount Bills A/c and crediting Discount on bills , latter the account shown on Asset side of Balance sheet of the Bank , in the next F.Y account will be closed and transfer to the Discount on Bills A/c ,

1 Like

Sindhuja Sivaraman (Student) (115 Points)
Replied 04 February 2023

Thank you for your reply.

Is it like an accrued income?

prasad Nilugal ( GST Practitioner & Accounts ) (14163 Points)
Replied 04 February 2023

Yes , Income Accrued but not received by the Bank

1 Like

Sindhuja Sivaraman (Student) (115 Points)
Replied 04 February 2023

Then it is an asset for the bank.

Why it is showed on liability side?

Please clarify.

prasad Nilugal ( GST Practitioner & Accounts ) (14163 Points)
Replied 04 February 2023

No , I have corrected above in my first reply as Asset side .

1 Like

Yasaswi Gomes new (Finance ) (4474 Points)
Replied 04 February 2023

If it shows on liability, it is deferred liability.

Sindhuja Sivaraman (Student) (115 Points)
Replied 04 February 2023

When it shows liability?

It is an asset to the bank not yet received

Please explain how it is a liability?

sabyasachi mukherjee (26043 Points)
Replied 06 February 2023

Rebate on such bills are only earned.

Sindhuja Sivaraman (Student) (115 Points)
Replied 06 February 2023

Thank you for your reply.

Please tell me the entry for recording the rebate on bills discounted.

prasad Nilugal ( GST Practitioner & Accounts ) (14163 Points)
Replied 06 February 2023

Rebet on Bill Discount A/c Dr
To Discount on Bills. A/c Cr
( Discount on Bills earned but not received)

Rebet on Bills Discount A/c will be under asset side Balance sheet , and Discount on Bills A/c will be profit and loss account credit side under head Income.

Sindhuja Sivaraman (Student) (115 Points)
Replied 06 February 2023

Thank you sir.

But in my book this is given as exactly opposite as income received but not earned and the entry given is reversed.

Hereby attached the image.

Please check and confirm which is correct

Thank you

Attached File : 3801516 20230206174024 16756854051516074817846319955039.jpg downloaded: 26 times

prasad Nilugal ( GST Practitioner & Accounts ) (14163 Points)
Replied 06 February 2023

Sorry madam, when Bank discount the bill , we received Income in advance , bill amount along with rebet earn for example bill of Rs 10000/- collected by the Bank in this 10000/- discount earned rs 250 , so this 250 received in Advance which of next year therefore it's Liability, please correct and reverse entity we have to pass . above entry is incorrect ones again sorry for wrong entry .

so correct entry is

Discount on bill A/c Dr

To Rebet on Discounted bills A/c Cr

( Discount received Received in advance )