Explanation
Rebate on Bills Discounted is also known as Discount Received in Advance, or, Unexpired Discount or, Discount Received but not earned.
Its treatment is same as we do in the case of Interest Received in Advance.
1] Entry for Cancellation of Bill:
Bills Payable A/c ……….………….. Dr
To Drawer Personal A/c
2] Entry for part payment in cash:
Drawer’s Personal A/c……………… Dr
To Cash A/c
3] Entry for Interest Paid:
Interest A/c …………………………. Dr
4] Interest not paid:
To Drawer’s Personal A/c
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