Bills receivable journal

Definition and explanation

The bills receivable journal (or the bills receivable book) is a special journal that businesses use for recording all the bills (i.e., acceptances) received from their debtors.

Sometimes debtors pay by accepting bills of exchange instead of cash. If these acceptances are small in number, they can be recorded in the general journal. However, if a business receives numerous acceptances during its accounting periods, it is advisable to maintain a bills receivable journal to record these transactions. In the same way, a bills payable journal can be maintained to record all acceptances given to creditors.

Whenever a bill is accepted by a creditor, an entry is made in the bills receivable journal. This journal, therefore, shows the number as well as the amounts of the bills drawn and received by the business during a particular period of time. The total of the amount column in this journal is debited to the bills receivable account maintained in the general ledger. In the subsidiary ledger of debtors, accounts of individual debtors from whom the bills have been received are credited by the amount mentioned against their names.

Format of a bills receivable journal

A twelve column format of the bills receivable journal is shown below:

The bills receivable journal records an entry only when an acceptance is received from a debtor. The entries relating to the endorsement, renewal, and dishonor of a bill are not recorded in this journal; rather, these transactions are recorded in the general journal.