Renewal Bill of Exchange

Cancellation of bill on maturity in return of a new bill for an extended period of credit is known as renewal of bill of exchange. 

A. Cancellation of Old Bill or Dishonour of Bill:

1. Books of Drawer:

Drawee’s A/c                     ...Dr.

     To Bills Receivable A/c        or

     To Bank A/c                         or

     To Bill Sent for Collection A/c  or

     To Endorsee’s A/c

(Being old bill cancelled for renewal)

2. Books of Drawee:

Bills Payable A/c                     ...Dr.

      To Drawer’s A/c

(Being our acceptance cancelled for renewal)

B. Interest Due on Balance Amount:

1. Books of Drawer:

Drawee’s A/c                     ...Dr.

     To Interest A/c

(Being interest due)

2. Books of Drawee: 

Interest A/c                   ...Dr.  

          To Drawer’s A/c  

(Being interest due)

C. Receiving / Paying Part Payment:

1. Books of Drawer:

Cash / Bank A/c                          Dr.  

     To Drawee’s A/c  

(Being part payment received along with interest)  

Note: Add interest amount if received

2. Books of Drawee:

Drawer’s A/c                      ...Dr.

      To Cash / Bank A/c

(Being part payment made along with interest)

D. Drawing and Acceptance of New Bill:

1. Books of Drawer:

Bills Receivable A/c                 ...Dr.

       To Drawee’s A/c

(Being a new bill drawn and accepted for the balance)

Note: Add interest amount if included

2. Books of Drawee:

Drawer’s A/c                  ...Dr.

       To Bills Payable A/c

(Being new bill accepted for the balance)

When Interest Paid in Cash Immediately

A. Cancellation of Old Bill

1. Books of Drawer:

Drawee’s A/c                     ...Dr.

     To Bills Receivable A/c        or

     To Bank A/c                         or

     To Bill Sent for Collection A/c  or

     To Endorsee’s A/c

(Being old bill cancelled for renewal)

2. Books of Drawee:

Bills Payable A/c                     ...Dr.

      To Drawer’s A/c

(Being our acceptance cancelled for renewal)

B. Interest Paid in Cash Along with Part Payment:

1. Books of Drawer:

Cash / Bank A/c                     ...Dr.

        To Drawee’s A/c

        To Interest A/c

(Being part payment received with interest in cash)

2. Books of Drawee:

Drawee’s A/c                         ...Dr.

Interest A/c                            ...Dr.

        To Cash / Bank A/c

(Being part payment made along with interest)

C. New Bill Drawn for Balance:

1. Books of Drawer:

Bills Receivable A/c                  ...Dr.

       To Drawee’s A/c

(Being new bill drawn and acceptance received)

2. Books of Drawee: 

Drawer’s A/c                        ...Dr.

      To Bills Payable A/c

(Being acceptance given)