In which of the following cases is no journal entry recorded in the drawer's books?

Show Answers

When the drawee honors a discounted bill on its maturity dateWhen the bill is forwarded to the bank for collectionWhen the drawee requests the bill to be renewedWhen the debtor accepts a bill issued by the drawerNone of the above

Explanation

No journal entry is made in the drawer’s books when a discounted bill is honored by the drawee on the due date because the entry was already recorded at the time of discounting. In contrast, when a bill is sent to the bank for collection, the drawer records an entry debiting 'Bills sent to bank for collection' and crediting 'Bills Receivable'. If the bill is renewed at the drawee’s request, the old bill is canceled and a new bill with interest is recorded through a journal entry. Similarly, when a debtor accepts a bill drawn by the drawer, the debtor's account is replaced by the 'Bills Receivable' account through a journal entry. Therefore, the correct answer is the first option.