It is often convenient to record transactions relating to bills of exchange in the general journal. This is especially true when there are only a few transactions.
However, in small, medium-sized, and large organizations, where numerous bills are drawn and accepted every day, special books need to be maintained to record transactions for bills of exchange.
These books are a part of the journal known as the subsidiary books or special journal.
At regular intervals, the amounts of various bills are totaled, and the total of the Bills Receivable Book shows the total amount of bills receivable. This is posted on the debit side of the Bills Receivable account in the main ledger.
The total of the Bills Payable Book shows the total amount of bills accepted, which is posted on the credit side of the Bills Payable account.
When these special journals are maintained, all transactions regarding bills of exchange are recorded in these books, except for the following entries (instead, these are recorded in general journal):
- Entry for endorsement of bill
- Entries for dishonoring bill
- Entry for renewal of bill
Specimen/Format of Bills Receivable Book
Specimen/Format of Bills Payable Book