Bill of Exchange receivable

For bills of exchange receivable, there are three events which are posted in Financial Accounting:

1. Payment by Bill of Exchange – Tcode F-36

2. Bill of Exchange Usage (Discounting) – Tcode F-33
3. Cancel the Bill of Exchange Liability

0. At the point of Sales.

Dr. Customer 10000

Cr. Sales 10000

Sub Ledger General Ledger

Customer Trade Debtor (Recon A/c)

(0) 10000 (0) 10000

Sales
(0) 10000

1. Payment by Bill of Exchange (Letter of Credit (LC))

Menupath Document entry > Bill of exchange > Payment

The customer make a payment with 90 days Letter of Credit for the outstanding balance. After you post this entry, you just wait till maturity and
collect the money from the bank. Then go to step 4.

Dr. Customer (w) \ LC Receivable 10000

Cr. Customer \ Trade Debtors 10000

Sub Ledger General Ledger

Customer Trade Debtor (Recon A/c)

(0) 10000 (1) 10000 (0) 10000 (1) 10000

Customer (Special GL)

(1) w 10000
Sales
(0) 10000

LC Receivable (Recon A/c)

(1) 10000

1a. If you post the bill of exchange receivable, you charge your customer the bill charges (optional)
Bill charges = 5% of 10000 = 500

Dr. Customer 500

Cr. Discount Revenue 500

Sub Ledger General Ledger

Customer Discount Revenue

(0) 10000 (1) 10000 (1a) 500
(1a) 500

Customer (Special GL)

 (1) w 10000

2. Bill of Exchange Usage (Discounting) – Tcode F-33

Menupath Accounting > Financial accounting > Accounts receivable > Document entry > Bill of exchange > Discounting (Collection, Forfaiting)

However, if you have decided to cash out (refinance this bill), then you have to discount the bill. With this discounting/cashing
out, you now owe the bank.
If the customer fails to pay, you are still liable.
Ignore this step if you do not refinance.

Assume Terms of payment 90 days

Interest rate 7%
Principal 10000

Interest Amount 175

Dr. Bank 9825

Dr. Bank Interest 175
Cr. Bank liablities 10000

General Ledger

Bank
(2) 9825

Bank Liablity
(2) 10000

Bank Interest
(2) 175

3. Cancel the Bill of Exchange Liability -

Menupath Posting. >Bill of exchange > Reverse contingent liability.

Upon 90 days when the bill is due.

Dr. Bank Liablity

Cr. Customer (w) \ LC Receivable

Sub Ledger General Ledger

Customer Trade Debtor (Recon A/c)

(0) 10000 (1) 10000 (0) 10000 (1) 10000
(1a) 500

Customer (Special GL)

(1) w 10000 (3) 10000
Sales
(0) 10000

LC Receivable (Recon A/c)

(1) 10000 (3) 10000

Bank
(2) 9825

Bank Liablity (BA)

(3) 10000 (2) 10000

Bank Interest
(2) 175
Bill of Exchange payable

1 Payment by Bill of Exchange

You pay an invoice with a bill of exchange. As a result, the payable is cleared; A bill of exchange payable is created.
2 Bill of Exchange Charges Statement
Your vendor sends you a bill of exchange charges statement. You post the invoice in the same way as for other invoices.
3 Payment of a Bill of Exchange
Your bank pays the bill of exchange by debiting the amount from your account. You post the bank debit entry and cancel the bill of exchange payable and the

0. At the point of Purchase

Dr. Goods & Services 10000

Cr. Vendors 10000

Sub Ledger General Ledger

Vendor Goods & Services

(0) 10000 (0) 10000

Trade Creditors (Recon A/c)

(0) 10000

1. Payment by Bill of Exchange (Letter of Credit (LC))

Menu path Document entry > Bill of exchange > Payment

The payment program posts a bill of exchange payment to the vendor account and to the special G/L account "Bills of exchange payable".

Dr. Vendor \ Trade Creditors 10000

Cr. Vendor (w) \ LC Payables 10000

Sub Ledger General Ledger

Vendor Goods & Services

(1) 10000 (0) 10000 (0) 10000

Vendor (Special GL)

(1) w 10000
Trade Creditors (Recon A/c)
(1) 10000 (0) 10000

LC Payables (Recon A/c)

(1) 10000

2 Bill of Exchange Charges Statement

Menu path Accounting > Financial accounting > Accounts receivable/Accounts payable > Document entry > Invoice/Credit memo

Your vendor sends you a bill of exchange charges statement. You post the invoice in the same way as for other invoices.

Bill charges = 5% of 10000 = 500

Dr. LC Charges 500
Cr. Vendor 500

Sub Ledger General Ledger

Vendor LC Charges
(1) 10000 (0) 10000 (1a) 500
(1a) 500

Customer (Special GL)

(1) w 10000

3 Payment of a Bill of Exchange

Menu path Document entry > Outgoing payment > Post
Upon 90 days when the bill is due.

Dr. Vendor (w) \ LC Payable

Cr. Bank

Sub Ledger General Ledger

Vendor Goods & Services

(1) 10000 (0) 10000 (0) 10000

Vendor (Special GL)

(3) 10000 (1) w 10000
Trade Creditors (Recon A/c)
(1) 10000 (0) 10000

LC Payables (Recon A/c)

(3) 10000 (1) 10000

Bank
(3) 10000
he bill of exchange payable and the bill of exchange liability.