It often happens that the drawee realizes that he is unable to make the entire bill payment at one time. During such situations, he makes a part payment of his bill of exchange instead of paying the entire amount. However, in accounting practice, this part payment is never treated as a mode of payment regarding a bill of exchange.

There are certain steps which are adopted for the accounting treatment of these part payments of a bill. These are as follows-

  • Dishonouring a bill
  • Either by drawing a fresh bill or receiving the total bill amount due
  • Accepting this part payment
  • Charging interest on the amount which is still due.


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