JOURNALIZING DRAFTS =103.= When a draft has been accepted, it should be treated the same as any other form of bill receivable or bill payable. If we make a draft on a customer, which he accepts, it becomes a bill receivable. If we accept a draft drawn on us, it becomes a bill payable. Sight drafts are frequently made use of as a convenient means of collecting an account. Such drafts are taken to our bank for collection, but they do not give us credit for the amount until the draft is paid. Drafts of this kind, which are placed with the bank for collection only, are not treated as bills receivable, as we do not credit the account of the one on whom it is drawn until payment is received. =104. When Our Sight Draft is Paid.= We draw on Samuel Smart at sight for $50.00 through our bank. When paid, we receive credit at the bank for the amount, less collection charges. The entry in our journal is: Bank $49.90 Interest and Discount .10 Samuel Smart $50.00 Paid sight draft =105. When Discounting Time Draft.= Samuel Smart owes us $100.00, and while the amount is not due for 30 days, we have reason to believe that he will accept a draft payable in 30 days. We accordingly draw on him through our bank. Our reason for doing this is that his acceptance will be a promise to pay, and our bank will then discount the draft. The draft is accepted, and our bank notifies us that the proceeds have been placed to our credit, the draft being discounted at 6%. The entries are: Bills Receivable $100.00 Samuel Smart $100.00 Samuel Smart accepted our 30-day draft Bank 99.50 Interest and Discount .50 Bills Discounted $100.00 Discounted Samuel Smart's 30-day acceptance. =106. When We Accept.= When we accept a draft payable at a future date, it immediately becomes a bill payable and should be so treated. We accept the 30-day draft of the Western Grocer Co. for $200.00. Our journal entry is: Western Grocer Co. $200.00 Bills Payable $200.00 Accepted 30-day draft. =107. When We Pay an Acceptance.= When this draft is due, we pay it, giving our check to the bank. The entry is: Bills Payable $200.00 Bank $200.00 Gave check to pay draft of Western Grocer Co. =108. When We Pay a Sight Draft.= Instead of accepting a time draft, we pay a sight draft of Western Grocer Co. for $200.00. In this case it has not become a bill payable, and our entry is: Western Grocer Co. $200.00 Bank $200.00 Check to Merchants Bank to pay sight draft. =EXAMPLES FOR PRACTICE= The following examples are to be journalized by the student after he has become thoroughly familiar with the transactions previously explained: --Nov. 6--