Notes: (1) on 2/1/13 a Bill of Exchange has been discounted from bank and bank has charged 1% of Rs.1000 as discounting charges. The entry for discounting charges will be passed in the General Journal:
Discounting Charges A/c Dr. 10
To Bills Receivable A/c 10
This is the reason the discounting charges are not shown in the Cash Book. In the cash book only the discount allowed on money received from debtors or received discount from our creditors is shown.
(2) 100 bonds of face value Rs.100 each is purchased at Rs.95 per share. Actually Rs.95 is the market price of the bond and Rs.9500 only have been spent. Actually in this transaction no discount is involved.