DK Goel Solutions Chapter 18 Bills of Exchange

DK Goel Accountancy Class 11 Solutions Chapter 18 Bills of Exchange which is outlined by expert Accountancy teachers from the latest version of DK Goel Class 11 Accountancy books. We at BYJU’S provide DK Goel Solutions to assist students to comprehend all the theories in particular.

There are numerous concepts in Accountancy, but the concepts of Trial Balance, Depreciation and Bank Reconciliation Statement (BRS) are required.

DK Goel Accountancy Class 11 Solutions – Chapter 18

Question 1

Date of bills

Period

1st February, 2017

2 months

31st January, 2017

3 months

30th September, 2017

2 months

30th September, 2017

3 months

29th December, 2017

2 months

31st December, 2017

2 months

15th July, 2017

3 months

27th January, 2016

1 month

Solution:

Sl. No.

Date of Bill Drawn

Period

Grace Days

Due Date = Date of Bill Drawn + Period + Grace Days

I.

February 01, 2017

2 months

3 days

April 04, 2017

II.

January 31, 2017

3 months

3 days

May 03, 2017

III.

September 30, 2017

2 months

3 days

December 03, 2017

IV.

September 30, 2017

3 months

3 days

January 02, 2018

V.

December 29, 2017

2 months

3 days

March 03, 2018

VI.

December 31, 2017

2 months

3 days

March 03, 2018

VII.

July 15, 2017

30 days

3 days

August 17, 2017

VIII.

January 27, 2016

1 month

3 days

March 01, 2016

Question 2

Date of bills

Period

29th May, 2017

4 months

31st March, 2017

1 month

21st July, 2017

60 days

14th May, 2017

90 days

28th January, 2017

1 month

31st January, 2017

1 month

Solution:

Sl. No.

Date of Bill Drawn

Period

Grace Days

Due Date = Date of Bill Drawn + Period + Grace Days

I.

May 29, 2017

4 months

3 days

October 01, 2017

II.

March 31, 2017

1 month

3 days

May 03, 2017

III.

July 21, 2017

60 days

3 days

September 23, 2017

IV.

May 14, 2017

90 days

3 days

August 14, 2017

V.

January 28, 2016

1 month

3 days

March 02, 2016

VI.

January 31, 2016

1 month

3 days

March 03, 2016


Note
:

(i) Whenever the due date is on public holiday then the due date will be the previous day. (In this bill the public holiday is on October 2, 2017 and August 15, 2017),

(ii) In emergency holiday then the due date is succeeding or the next following day. (here September 22, 2017), e.

Question 3

On 1st January, 2017, Ajay sold goods to Bhushan for ₹ 10,000. Ajay draws a bill of exchange for two months for the amount due which Bhushan accepts and returns it to Ajay, Bhushan met the bill on the due date. Pass Journal entries in the books of Ajay and Bhushan.

Solution:

Journal Books of Ajay

Date

Particulars

L.F.

Debit ₹

Credit ₹

2017

January 1

Bhushan

Dr.

10,000

To Sales A/c

(Sold goods to Bhushan)

10,000

January 1

Bills Receivable A/c

Dr.

10,000

To Bhushan

(Bill accepted by Bhushan)

10,000

March 4

Cash A/c

Dr.

10,000

To Bills Receivable A/c

(Bill honoured on maturity)

10,000

Books of Bhushan

Journal

Date

Particulars

L.F.

Debit ₹

Credit ₹

2017

January 1

Purchases A/c

Dr.

10,000

To Ajay

(Goods bought from Ajay)

10,000

January 1

Ajay

Dr.

10,000

To Bills Payable A/c

(Bill drawn by Ajay, accepted)

10,000

March 4

Bills Payable A/c

Dr.

10,000

To Cash A/c

(Bill honoured on maturity)

10,000

Question 4

On Jan. 1,2017, Tarun purchased goods from Arun for ₹ 20,000 and immediately drew a promissory note in favour of Arun payable after 1 month. Date of maturity of the promissory note was declared emergency holiday by the Government of India under the Negotiable Instrument Act 1881. Tarun met the promissory note according to the provisions of law.

Pass the necessary Journal entries in the books of Arun and Tarun.

Solution:

Journal Books of Arun

Date

Particulars

L.F.

Debit

Amount

(Rs)

Credit

Amount

(Rs)

2017

January 1

Tarun

Dr.

20,000

To Sales A/c

20,000

(Sold goods to Tarun)

January 1

Bills Receivable A/c

Dr.

20,000

To Tarun

20,000

(Promissory note accepted byTarun)

February 5

Cash A/c

Dr.

20,000

To Bills Receivable A/c

20,000

(Promissory note honoured on maturity)

Books of Tarun

Journal

Date

Particulars

L.F.

Debit ₹

Credit ₹

2017

January 1

Purchases A/c

Dr.

20,000

To Arun

(Purchased goods from Arun)

20,000

January 1

Arun

Dr.

20,000

To Bills Payable A/c

(Promissory note withdrawn by Arun, accepted)

20,000

February 5

Bills Payable A/c

Dr.

20,000

To Cash A/c

(Promissory note honoured on maturity)

20,000

Note: Here, 4th February 2017 falls on the emergency holiday, therefore, the due date will be on succeeding date i.e. 5th February, 2017.

Question 5

On Feb. 6, 2017, A sold goods for ₹ 1,00,000 to B. B paid 40% immediately on which A allowed a cash discount of ₹ 500. For the balance A drew a bill on B payable after 30 days. Due date of bill was a public holiday and the bill was met as per the provisions of the Negotiable Instrument Act. Journalise the above transactions in the books of A and B.

Solution:

Journal Books of A

Date

Particulars

L.F.

Debit ₹

Credit ₹

2017

February 6

B’s A/c

Dr.

1,00,000

To Sales A/c

(Sold goods to B)

1,00,000

February 6

Cash A/c

Dr.

39,500

Discount Allowed A/c

Dr.

500

Bills Receivable A/c

Dr.

60,000

To B

(Bill accepted by B)

1,00,000

March 10

Cash A/c

Dr.

60,000

To Bills Receivable A/c

(Bill honoured on maturity)

60,000

Journal Books of B

Date

Particulars

L.F.

Debit ₹

Credit ₹

2017

February 6

Purchases A/c

Dr.

1,00,000

To A

(Purchased goods from A)

1,00,000

February 6

A’s A/c

Dr.

1,00,000

To Cash A/c

39,500

To Discount Received A/c

500

To Bills Payable A/c

(Bill withdrawn by A, accepted)

60,000

March 10

Bills Payable A/c

Dr.

60,000

To Cash A/c

(Bill honoured on maturity)

60,000

Note: Here the due date falls on 11th March 2017 which falls on public holiday. Therefore, the due date will be on the preceding date i.e. March 10, 2017.

Question 6(A)

Vishal sold goods for ₹ 7,000 to Manju on Jan. 5, 2017 and drew upon her a bill of exchange payable after 2 months. Manju accepted Vishal’s draft and handed over the same to Vishal after acceptance. Vishal immediately discounted the bill with his bank @ 12% p.a. On the due date, Manju met her acceptance. Journalise the above transactions in the books of Vishal and Manju.

Solution:

Journal Books of Vishal

Date

Particulars

L.F.

Debit

Credit

2017

January 5

Manju

Dr.

7,000

To Sales A/c

(Sold goods to Manju)

7,000

January 5

Bills Receivable A/c

Dr.

7,000

To Manju

(Bill accepted by Manju)

7,000

January 5

Bank A/c

Dr.

6,860

Discounting Charges A/c

Dr.

140

To Bills Receivable A/c

(Bank discounted bill for 2 months d@ 12% p.a.)

7,000

Journal Books of Manju

Date

Particulars

L.F.

Debit ₹

Credit ₹

2017

January 5

Purchases A/c

Dr.

7,000

To Vishal

(Purchased goods from Vishal)

7,000

January 5

Vishal

Dr.

7,000

To Bills Payable A/c

(Bill withdrawn by Vishal, accepted)

7,000

March 8

Bills Payable A/c

Dr.

7,000

To Cash A/c

(Bill honoured on maturity)

7,000

Working Note: Evaluating discounting Charges

Discounting charges = 7,000 X \(\frac{12}{100}\) X \(\frac{2}{12}\) = ₹ 140

Question 6(B)

On 15th February 2017, X sold goods to Y for ₹ 6,000. On the same day, Y accepted a bill drawn upon him by X for three months for ₹ 6,000. X immediately discounted the bill at 15% p.a. at his bank and Y met the bill on maturity. Make Journal entries in the books of both the parties.

Solution:

Journal Books of X

Date

Particulars

L.F.

Debit ₹

Credit ₹

2017

February 15

Y’s A/c

Dr.

6,000

To Sales A/c

(Sold goods to Y)

6,000

February 15

Bills Receivable A/c

Dr.

6,000

To Y A/c

(Bill accepted by Y)

6,000

February 15

Bank A/c

Dr.

5,775

Discounting Charges A/c

Dr.

225

To Bills Receivable A/c

(Bank discounted the bill discounted for 3months @ 15% p.a.)

6,000

Journal Books of Y

Date

Particulars

L.F.

Debit ₹

Credit ₹

2017

February 15

Purchases A/c

Dr.

6,000

To X’s A/c

(Purchased goods from X)

6,000

February 15

X’s A/c

Dr.

6,000

To Bills Payable A/c

(Bill withdrawn by X, accepted)

6,000

May 18

Bills Payable A/c

Dr.

6,000

To Cash A/c

(Bill honoured on maturity)

6,000

Working Note: Evaluating discounting charges

Discounting charges = 6,000 X \(\frac{15}{100}\) X \(\frac{3}{12}\) = ₹ 225

Question 7

B owed ₹ 5,100 to A. On 15th January, 2017, he accepted a bill for ₹ 5,000 for two months drawn by A in full settlement of his debt. On 18th January, 2017, A endorsed the bill to his creditor C. The bill was duly met on the date of maturity. Pass Journal entries in the books of A, B and C.

Solution:

Journal Books of A

Date

Particulars

L.F.

Debit ₹

Credit ₹

2017

January 15

Bills Receivable A/c

Dr.

5,000

Discount Allowed A/c

Dr.

100

To B

(B accepted the bill)

5,100

January 18

C

Dr.

5,000

To Bills Receivable A/c

5,000

(Bill endorsed bill for C)

Journal Books of B

Date

Particulars

L.F.

Debit ₹

Credit ₹

2017

January 15

A’s A/c

Dr.

5,100

To Bills Payable A/c

5,000

To Discount Received A/c

(Bill withdrawn by A, accepted)

100

March 18

Bills Payable A/c

Dr.

5,000

To Cash A/c

5,000

(Bill honoured on maturity)

Journal Books of C

Date

Particulars

L.F.

Debit ₹

Credit ₹

2017

January 18

Bills Receivable A/c

Dr.

5,000

To A

(A received bill receivable)

5,000

March 18

Cash A/c

Dr.

5,000

To Bills Receivable A/c

5,000

(Bill honoured on maturity)

Question 8

On 10th January, 2017, A sells goods to B for ₹ 12,000. On that date, B accepted a bill drawn upon him by A at two months for ₹ 12,000. A retains the bill till due date and on due date sends the bill to the Banker for collection. In due course, A receives the information from the Bank that the bill has been duly met.

Pass Journal Entries in the books of A and B.

Solution:

Journal Books of A

Date

Particulars

L.F.

Debit ₹

Credit ₹

2017

January 10

B’s A/c

Dr.

12,000

To Sales A/c

(Sold goods to B)

12,000

January 10

Bills Receivable A/c

Dr.

12,000

To B

(Bill accepted by B)

12,000

March 13

Bill Sent for Collection A/c

Dr.

12,000

To Bills Receivable A/c

(Bills sent to bank for collection)

12,000

March 13

Bank A/c

Dr.

12,000

To Bills Sent for Collection A/c

(Bill honoured on maturity)

12,000

Journal Books of B

Date

Particulars

L.F.

Debit ₹

Credit₹

2017

January 10

Purchases A/c

Dr.

12,000

To A

12,000

(Goods purchased from A)

January 10

A’s A/c

Dr.

12,000

To Bills Payable A/c

12,000

(Bill withdrawn by A, accepted)

March 13

Bills Payable A/c

Dr.

12,000

To Cash A/c

12,000

(Bill honoured on maturity)

Question 9

On Jan. 15, 2017, Kusum sold goods for ₹ 30,000 to Pushpa and drew upon her three bills of exchanges of ₹ 10,000 each payable after one month, two months and three months respectively. The first bill was retained by Kusum till its maturity. The second bill was endorsed by her in favour of her creditor Khushboo and the third bill was discounted by her immediately @ 6% p.a. All the bills were met by Pushpa. Journalise the above transactions in the books of Kusum and Pushpa.

Solution:

Journal Books of Kusum

Date

Particulars

L.F.

Debit ₹

Credit ₹

2017

January. 15

Pushpa

Dr.

30,000

To Sales A/c

30,000

(Sold goods to Pushpa)

January 15

Bills Receivable A/c (1)

Dr.

10,000

Bills Receivable A/c (2)

Dr.

10,000

Bills Receivable A/c (3)

Dr.

10,000

To Pushpa

30,000

(Bill accepted by Pushpa)

January 15

Khushboo

Dr.

10,000

To Bills Receivable A/c (2)

10,000

(Endoresed bill inKhushboo’s favour)

January 15

Bank A/c

Dr.

9,850

Discounting Charges A/c

Dr.

150

To Bills Receivable A/c (3)

10,000

(Bank discounted bill for 3 months @ 6% p.a.)

February 18

Cash A/c

Dr.

10,000

To Bills Receivable A/c (1)

10,000

(Bill honoured on maturity)

Books of Pushpa

Journal

Date

Particulars

L.F.

Debit ₹

Credit ₹

2017

January 15

Purchases A/c

Dr.

30,000

To Kusum

30,000

(Purchased goods from Kusum)

January 15

Kusum

Dr.

30,000

To Bills Payable A/c (1)

10,000

To Bills Payable A/c (2)

10,000

To Bills Payable A/c (3)

10,000

(Bills withdrawn by Kusum, accepted)

February 18

Bills Payable A/c

Dr.

10,000

To Cash A/c

10,000

(Bill (1) honoured on maturity)

March18

Bills Payable A/c (2)

Dr.

10,000

To Cash A/c

10,000

(Bill (2) honoured on maturity)

April 18

Bills Payable A/c (3)

Dr.

10,000

To Cash A/c

10,000

(Bill (3) honoured on maturity)

Working Notes: Evaluating discounting charges

Discounting charges = 610,000 X \(\frac{6}{100}\) X \(\frac{3}{12}\) = ₹ 150

Question 10

X draws on Y a bill for ₹ 4,000 which was duly accepted by Y. Y meets the bill on its due date. Show what entries would be passed in the books of X and Y under each of the following circumstances:

(i) If X retains the bill till due date.

(ii) If X discounts the same with his banker paying ₹ 100 for discount.

(iii) If X endorses the same to his creditor Z, in full settlement of his debt of ₹ 4,080.

(iv) If X sends the bill to his banker for collection.

Solution:

Journal Books of X

Date

Particulars

L.F.

Debit ₹

Credit ₹

Bill drawn by X

Bills Receivable A/c

Dr.

4,000

To Y’s A/c

(Bill accepted by Y)

4,000

(i)

Bill retained till maturity

Cash A/c

Dr.

4,000

To Bills Receivable A/c

(Bill honoured on maturity)

4,000

(ii)

Bill discounted with bank

Bank A/c

Dr.

3,900

Discounting Charges A/c

Dr.

100

To Bills Receivable A/c

(Bill discounted with the bank)

4,000

(iii)

Bill endorsed to Z

Z’s A/c

Dr.

4,080

To Bills Receivable A/c

4,000

To Discount Received A/c

(Bill endorsed in Z’s favour)

80

(iv)

Bill sent to bank for collection

Bills Sent for Collection A/c

Dr.

4,000

To Bills Receivable A/c

(Bank received bill for collection)

4,000

Bank A/c

Dr.

4,000

To Bill Sent for Collection A/c

4,000

(Bill honoured on maturity)

Journal Books of Y

Date

Particulars

L.F.

Debit ₹

Credit ₹

Bill accepted by Y

X’s A/c

Dr.

4,000

To Bills Payable A/c

(Bill drawn by Y, accepted)

4,000

Same entry will be passed in all the four cases

Bills Payable A/c

Dr.

4,000

To Cash A/c

(Bill honoured on maturity)

4,000

Question 11

X made the following sales to Y:

Date

Amount (₹)

Jan. 01, 2017

20,000

Jan. 08, 2017

25,000

Jan. 10, 2017

10,000

Jan. 15, 2017

40,000

For all the sales X drew bills on Y payable after 60 days. Bill drawn on Jan. 01, 2017 was retained by X with him till its due date. The bill drawn on Jan. 08, 2017 was discounted by X from the bank at 9% p.a. The bill drawn on Jan. 10, 2017 was endorsed by X to his creditor Z in full settlement of ₹ 10,400. On March 12, 2017 X sent the bill drawn on Jan. 15, 2017 to his bank for collection. All the bills were met by Y on due dates.

Pass necessary journal entries in the books of X and Y and prepare Y‘ s account in the books of X and X‘s account in the books of Y.

Solution:

Journal

Date

Particulars

L.F.

Debit ₹

Credit ₹

2017

January 1

Y’s A/c

Dr.

20,000

To Sales A/c

(Goods sold to Y)

20,000

January 1

Bills Receivable A/c (1)

Dr.

20,000

To Y’s A/c

(Bill accepted by Y)

20,000

January 8

Y’s A/c

Dr.

25,000

To Sales A/c

25,000

(Sold goods to Y)

January 8

Bills Receivable A/c (2)

Dr.

25,000

To Y’s A/c

25,000

(Bill accepted by Y)

January 8

Bank A/c

Dr.

24,630

Discounting Charges A/c

Dr.

370

To Bills Receivable A/c (2)

25,000

(Bank discounted the bill for 60 days @ 9% p.a.)

January 10

Y’s A/c

Dr.

10,000

To Sales A/c

10,000

(Sold goods to Y)

January 10

Bills Receivable A/c (3)

Dr.

10,000

To Y’s A/c

10,000

( Y accepted the bill)

January 10

Z’s A/c

Dr.

10,400

To Bills Receivable A/c (3)

10,000

To Discount Received A/c

400

(Bill endorsed in Z’s favour)

January 15

Y’s A/c

Dr.

40,000

To Sales A/c

40,000

(Sold goods to Y)

January 15

Bills Receivable A/c (4)

Dr.

40,000

To Y’s A/c

40,000

(Y accepted the bill)

March 5

Cash A/c

Dr.

20,000

To Bills Receivable A/c (1)

20,000

(Bill honoured on maturity)

March 12

Bill Sent for Collection A/c

Dr.

40,000

To Bills Receivable A/c (4)

40,000

(Bill sent to the bank for collection)

March 19

Bank A/c

Dr.

40,000

To Bills for Collection A/c

40,000

(Bill honoured on maturity)

Y’s Account

Dr.

Cr.

Date

Particulars

J.F.

Date

Particulars

J.F.

2017

2017

January 1

Sales A/c

20,000

January1

Bills Receivable A/c (1)

20,000

January 8

Sales A/c

25,000

January 8

Bills Receivable A/c (2)

25,000

January 10

Sales A/c

10,000

January 10

Bills Receivable A/c (3)

10,000

January 15

Sales A/c

40,000

January 15

Bills Receivable A/c (4)

40,000

95,000

95,000

Journal Books of Y

Date

Particulars

L.F.

Debit ₹

Credit ₹

2017

January 1

Purchases A/c

Dr.

20,000

To X

20,000

(Goods purchased from X)

January 1

X

Dr.

20,000

To Bills Payable A/c (1)

20,000

(Bill drawn by X, accepted)

January 8

Purchases A/c

Dr.

25,000

To X

25,000

(Goods purchased from X)

January 8

X

Dr.

20,000

To Bills Payable A/c (2)

20,000

(Bill drawn by X, accepted)

January 10

Purchases A/c

Dr.

10,000

To X

10,000

(Goods purchased from X)

January.10

X

Dr.

10,000

To Bills Payable A/c (3)

10,000

(Bill drawn by X, accepted)

January 15

Purchases A/c

Dr.

40,000

To X

40,000

(Goods purchased from X)

January 15

X

Dr.

40,000

To Bills Payable A/c (4)

40,000

(Bill drawn by X, accepted)

March 5

Bills Payable A/c (1)

Dr.

20,000

To Cash A/c

20,000

(Bill honoured on maturity)

March 12

Bills Payable A/c (2)

Dr.

25,000

To Cash A/c

25,000

(Bill honoured on maturity)

March 14

Bills Payable A/c (3)

Dr.

10,000

To Cash A/c

10,000

(Bill honoured on maturity)

March 19

Bills Payable A/c (4)

Dr.

40,000

To Cash A/c

40,000

(Bill honoured on maturity)

X’s Account

Dr.

Cr.

Date

Particulars

J.F.

Date

Particulars

J.F.

2017

2017

January 1

Bills Payable A/c (1)

20,000

January 1

Purchases A/c

20,000

January 8

Bills Payable A/c (2)

25,000

January 8

Purchases A/c

25,000

January 10

Bills Payable A/c (3)

10,000

January 10

Purchases A/c

10,000

January 15

Bills Payable A/c (4)

40,000

January15

Purchases A/c

40,000

95,000

95,000

Working Note: Evaluating discounting charges

Discounting charges = 25,000 X \(\frac{9}{100}\) X \(\frac{60}{365}\) = ₹ 365

Question 12

On January 1, 2017, Ajay sold goods to Balbir for ₹ 10,000 at a discount of 20%. On that date, Balbir accepted a bill, drawn on him by Ajay for ₹ 8,000 payable 3 months after sight. Having surplus funds, Balbir paid off the bill on 4th March, 2017 and was allowed a rebate of 18% per annum. Show Journal entries in the books of Ajay and Balbir.

Solution:

Journal Book of Ajay

Date

Particulars

L.F.

Debit ₹

Credit ₹

2017

January 1

Balbir

Dr.

8,000

Discount Allowed A/c

2,000

To Sales A/c

(Goods sold to Balbir)

10,000

January 1

Bills Receivable A/c

Dr.

8,000

To Balbir

8,000

(Bill accepted by Balbir)

March 4

Cash A/c

Dr.

7,880

Rebate A/c

Dr.

120

To Bills Receivable A/c

(Bill retired under the rebate of 18% p.a. for one month)

8,000

Books of Balbir

Journal

Date

Particulars

L.F.

Debit ₹

Credit ₹

2017

January 1

Purchases A/c

Dr.

8,000

To Ajay

8,000

(Goods purchased from Ajay)

January 1

Ajay

Dr.

8,000

To Bills Payable A/c

8,000

(Bill drawn by Ajay, accepted)

March 4

Bills Payable A/c

Dr.

8,000

To Cash A/c

7,880

To Rebate A/c

120

(Bill retired under the rebate of 18% p.a. for one month)

Working Note: Evaluating Rebate amount

Amount of Rebate=8,000 X \(\frac{18}{100}\) X \(\frac{1}{12}\) = ₹ 120

Question 13

On 17th April, 2016, X sold goods to Y for ₹ 80,000 and draws a bill for 2 months upon Y for the amount due. Y accepted the bill and returned it to X. On the due date the bill became dishonoured and X paid ₹ 400 as Noting Charges. Fifteen days later Y pays the amount due to X. Pass Journal entries in the books of both the parties.

Solution:

Books of X

Journal

Date

Particulars

L.F.

Debit ₹

Credit ₹

2016

April 17

Y’s A/c

Dr.

80,000

To Sales A/c

80,000

(GSold goods to Y)

April 17

Bills Receivable A/c

Dr.

80,000

To Y’s A/c

80,000

(Bill was accepted by Y)

June 20

Y’s A/c

Dr.

80,400

To Bills Receivable A/c

80,000

To Cash A/c

400

(Bill dishonoured on due date and received noting charges)

July 5

Cash A/c

Dr.

80,400

To Y

80,400

(Y received cash)

Books of Y

Journal

Date

Particulars

L.F.

Debit ₹

Credit ₹

2016

April 17

Purchases A/c

Dr.

80,000

To X’s A/c

80,000

(Goods purchased from X)

April 17

X’s A/c

Dr.

80,000

To Bills Payable A/c

80,000

(Bill withdrawn by X, accepted)

June 20

Bills Payable A/c

Dr.

80,000

Noting Charges A/c

Dr.

400

To X’s A/c

80,400

(Bills dishonoured on due date and paid notice charge)

July 05

X’s A/c

Dr.

80,400

To Cash A/c

80,400

(Paid to X)

Question 14 (A)

On 1st April, 2016, B accepts a bill drawn by A at three months for ₹ 8,000 in payment of debt. On the due date the acceptance is dishonoured and A gets the bill noted paying ₹ 100. On 4th July, 2016 A draws a new bill payable after 73 days provided interest is paid in cash @ 15% p.a. To this B is agreeable. The bill is met on maturity.

Record these transactions in the Journal of both the parties.

Solution:

Books of A

Journal

Date

Particulars

L.F.

Debit ₹

Credit ₹

2016

April 1

Bills Receivable A/c

Dr.

8,000

To B’s A/c

8,000

(Bill accepted by B)

July 04

B’s A/c

Dr.

8,100

To Bills Receivable A/c

8,000

To Cash A/c

100

(Bill dishonoured on due date and received noting charges)

July 4

B’s A/c

Dr.

243

To Interest A/c

243

(Due Interest to be received)

July 4

Cash A/c

Dr.

243

Bills Receivable A/c

Dr.

8,100

To B

8,343

(New bill accepted by B)

Sept. 18

Cash

Dr.

8,100

To Bills Receivable A/c

8,100

(Bill honoured on maturity)

Journal Books of B

Date

Particulars

L.F.

Debit ₹

Credit ₹

2016

April 1

A’s A/c

Dr.

8,000

To Bills Payable A/c

8,000

(Bill drawn by A, accepted)

July 4

Bills Payable A/c

Dr.

8,000

Noting Charges A/c

Dr.

100

To A’s A/c

8,100

(Bill dishonoured on due date and paid noting charges)

July 04

Interest A/c

Dr.

243

To A’s A/c

243

(Due interest to be paid)

July 4

A’s A/c

Dr.

8,343

To Cash A/c

243

To Bills Payable A/c (New)

8,100

(New bill drawn by A, accepted)

September 18

Bills Payable A/c

Dr.

8,100

To Cash A/c

8,100

(Bill honoured on maturity)

Working Note: Evaluating amount of Interest

Amount of Interest=8,100X \(\frac{15}{100}\) X \(\frac{73}{365}\) = ₹ 243

Question 14 (B)

On 15th October, 2016, Y purchased goods worth ₹ 75,000 from X, and accepted a three months bill for this amount drawn by X. On the due date, it was dishonoured. Noting charges paid by X ₹ 600. On 18th January, 2017, Y requested X for renewal of the bill for another two months, for which X agrees, provided that interest is paid @ 15% p.a. in cash. Make Journal entries of these transactions in the books of X and Y.

Solution:

Books of X

Journal

Date

Particulars

L.F.

Debit ₹

Credit ₹

2016

October 15

Y’s A/c

Dr.

75,000

To Sales A/c

75,000

(Goods sold to Y)

October 15

Bills Receivable A/c

Dr.

75,000

To Y’s A/c

75,000

(Y accepted the bill)

2017

January 18

Y’s A/c

Dr.

75,600

To Bills Receivable A/c

75,000

To Cash A/c

600

(Bill dishonoured on due date and noting charges paid)

January 18

Y’s A/c

Dr.

1,890

To Interest A/c

1,890

(Interest due to be received)

January 18

Cash A/c

Dr.

1,890

Bills Receivable A/c

Dr.

75,600

To Y’s A/c

77,490

(Y accepted the new bill)

March 21

Cash

Dr.

75,600

To Bills Receivable A/c

75,600

(Bill honoured on maturity)

Books of Y

Journal

Date

Particulars

L.F.

Debit ₹

Credit ₹

2016

October 15

Purchases A/c

Dr.

75,000

To X’s A/c

75,000

(Goods purchased from X)

October 15

X’s A/c

Dr.

75,000

To Bills Payable A/c

75,000

(Bill drawn by X, accepted)

2017

January 18

Bills Payable A/c

Dr.

75,000

Noting Charges A/c

Dr.

600

To X’s A/c

75,600

(Bill dishonoured on due date and noting charges paid)

January 18

Interest A/c

Dr.

1,890

To X’s A/c

1,890

(Interest due to be paid)

January 18

X’s A/c

Dr.

77,490

To Cash A/c

1,890

To Bills Payable A/c

75,600

(New bill drawn by X, accepted)

March 21

Bills Payable A/c

Dr.

75,600

To Cash A/c

75,600

(Bill honoured on maturity)

Working Notes: Evaluating amount of interest

Amount of interest = 75,600 X \(\frac{15}{100}\) X \(\frac{2}{12}\) = ₹ 1,890

Question 15

On 1st January, 2018, Dinesh purchased goods from Chander for ₹ 60,000 plus CGST and SGST @ 6% each. Dinesh pays ₹ 7,200 in cash and accepts a bill drawn by Chander for the balance amount payable after two months. On the due date Dinesh is able to manage ₹ 20,000 in cash and he arranges with Chander for the retirement of the bill in consideration of this payment and a fresh bill at four months for the balance plus interest at 18% per annum. The second bill is duly met on maturity.

Make the necessary Journal entries in the books of Chander and Dinesh.

Solution:

Journal Books of Chander

Date

Particulars

L.F.

Debit ₹

Credit ₹

2018

January 1

Chander A/c

Dr.

67,200

To Sales A/c

60,000

To Output CGST A/c

3,600

To Output SGST A/c

3,600

(Sold goods to Dinesh @ 6% SGST & CGST)

January 1

Bills Receivable A/c

Dr.

60,000

Cash A/c

Dr.

7,200

To Dinesh A/c

67,200

(Paid a portion amount in cash and remaining amount a bill was drawn)

March 4

Dinesh

Dr.

60,000

To Bills Receivable A/c

60,000

(Cancelled bill on the due date)

March 4

Cash A/c

Dr.

20,000

To Dinesh

20,000

(Received cash from Dinesh)

March 4

Dinesh

Dr.

2,400

To Interest A/c

2,400

(Due interest to be received)

March 4

Bills Receivable A/c

Dr.

42,400

To Dinesh

42,400

(New bill accepted by Dinesh)

July 7

Cash A/c

Dr.

42,400

To Bills Receivable A/c

42,400

(Bill honoured on due date)

Journal Books of Dinesh

Date

Particulars

L.F.

Debit ₹

Credit ₹

2018

January 1

Purchases A/c

Dr.

60,000

Input CGST A/c

Dr.

3,600

Input SGST A/c

Dr.

3,600

To Chander

67,200

(Purchased goods from Chander @ 6% CGST & SGST)

January 1

Chander

Dr.

67,200

To Bills Payable A/c

60,000

To Cash A/c

7,200

(A portion of amount made in cash and bill drawn for remaining amount)

March 4

Bills Payable A/c

Dr.

60,000

To Chander

60,000

(On due date bill dishonoured)

March 4

Chander

Dr.

20,000

To Cash A/c

20,000

(Paid cash to Chander)

March 4

Interest A/c

Dr.

2,400

To Chander

2,400

(Due interest due to be paid)

March 4

Chander

Dr.

42,400

To Bills Payable A/c

42,400

(Chander accepted the new bill drawn)

July 7

Bills Payable A/c

Dr.

42,400

To Cash A/c

42,400

(Paid cash to Chander)

Working Note: Evaluating amount of Interest

Amount of Interest = 40,000 X \(\frac{18}{100}\) X \(\frac{4}{12}\) = ₹ 2,400

Question 16

A sells goods for ₹ 30,000 to B on 1st January, 2017 and on the same day draws a bill on B at three months for the amount. B accepts it and returns it to A, who discounts it on 4th February, 2017 with his bank at 18% per annum. The acceptance is dishonoured on the due date, the noting charges paid by the bank being ₹ 200.

On 4th April, 2017, B accepts a new bill at two months for the amount then due to A together with interest at 12 per cent per annum.

Make Journal entries to record these transactions in the books of A and B.

Solution:

Journal Books of A

Date

Particulars

L.F.

Debit ₹

Credit ₹

2017

January 1

B’s A/c

Dr.

30,000

To Sales A/c

30,000

(Sold goods to B)

January 1

Bills Receivable A/c

Dr.

30,000

To B’s A/c

30,000

(Bill accepted by B)

February 4

Bank A/c

Dr.

29,100

Discounting Charges A/c

Dr.

900

To Bills Receivable A/c

30,000

(Bank gave discount for 2 months @ 18% p.a.)

April 4

B’s A/c

Dr.

30,200

To Bank A/c

30,200

(Bill dishonoured on due date and paid noting charges)

April 4

B’s A/c

Dr.

604

To Interest A/c

604

(Received due interest)

April 4

Bills Receivable A/c

Dr.

30,804

To B’s A/c

30,804

(New bill accepted by B)

June 7

Cash A/c

Dr.

30,804

To Bills Receivable A/c

30,804

(On due date bill was honoured)

Journal Books of B

Date

Particulars

L.F.

Debit ₹

Credit ₹

2017

January 1

Purchases A/c

Dr.

30,000

To A’s A/c

30,000

(Purchased goods from A)

January 1

A’s A/c

Dr.

30,000

To Bills Payable A/c

30,000

(Bill withdrawn by A, accepted)

April 4

Bills Payable A/c

Dr.

30,000

Noting Charges A/c

Dr.

200

To A’s A/c

30,200

(On due date bill dishonoured and paid noting charges)

Apr. 04

Interest A/c

Dr.

604

To A’s A/c

604

(Due interest to be paid)

Apr. 04

A’s A/c

Dr.

30,804

To Bills Payable A/c

30,804

(A drawn new bill, accepted)

June 07

Bills Payable A/c

Dr.

30,804

To Cash A/c

30,804

(On due date bill honoured)

Working Note 1: Evaluating discounting charges

Discounting Charges= 30,000 X \(\frac{18}{100}\) X \(\frac{2}{12}\) = ₹ 900

Working Note 2: Evaluating amount of interest

Amount of interest = 30,200 X \(\frac{12}{100}\) X \(\frac{2}{12}\) = ₹ 604

Question 17

On 21st Sept. 2017, Radhika sold goods for ₹ 2,00,000 to Parvati and drew upon later a bill for the same amount payable after 3 months. The bill was accepted by Parvati, Radhika discounted the bill from the bank at a discount of 15% p.a. on the 21st Oct., 2017. On maturity, the bill was dishonoured. Parvati agreed to pay ₹ 1,20,000 in cash including ₹ 3,000 interest and accepted a new bill for 3 months. The new bill was endorsed to Gayatri in full settlement of his account ₹ 85,000. It was duly met on maturity. Pass entries in the books of Radhika.

Solution:

Journal books of Radhika (Drawer)

Date

Particulars

L.F.

Debit ₹

Credit ₹

2017

September 21

Parvati’s A/c

Dr.

2,00,000

To Sales A/c

2,00,000

(Sold goods to Parvati)

September 21

Bills ReceivableA/c

Dr.

2,00,000

To Parvati’s A/c

2,00,000

(Receive Bill)

October 21

Bank A/c

Dr.

1,95,000

Discounting Charges A/c

Dr.

5,000

To Bills Receivable A/c

2,00,000

(Bill discounted for 2 months @ 15%)

December 24

Parvati’s A/c

Dr.

2,00,000

To Bank A/c

(Bill dishonoured)

2,00,000

December 24

Parvati’s A/c

Dr.

3,000

To Interest A/c

3,000

(Interest due)

December 24

Cash A/c

Dr.

1,20,000

Bill Receivable A/c

Dr.

83,000

To Parvati’s A/c

2,03,000

(Cash and new bill received from Parvati)

December 24

Gayatri’s A/c

Dr.

85,000

To Bills Receivable A/c

83,000

To Discount Received A/c

2,000

(New bill endorsed in full settlement)

Question 18

Asha sold goods worth ₹ 19,000 to Nisha on March 2, 2016. ₹ 4,000 were paid by Nisha immediately and for the balance she accepted a bill of exchange drawn upon her by Asha payable after three months. Asha discounted the bill immediately with her bank @ 10% p.a. On the due date Nisha dishonoured the bill and the bank paid ₹ 30 as noting charges.

On 5th June, Nisha paid ₹ 3,030 (including noting charges) in cash and accepted a new bill at one month for the amount due to Asha together with interest @ 15% p.a.

Record the necessary journal entries in the books of Asha and Nisha.

Solution:

Asha’s Journal

Date

Particulars

L.F.

Debit ₹

Credit ₹

2016

March 2

Nisha

Dr.

19,000

To Sales A/c

19,000

(Sold goods)

March 2

Bills Receivable A/c

Dr.

15,000

Cash A/c

Dr.

4,000

To Nisha

19,000

(Received acceptance)

March 2

Bank A/c

Dr.

14,625

Discounting Charges A/c

Dr.

375

To Bills Receivable A/c

15,000

(Bill discounted @10% p.a.)

June 5

Nisha (15,000 + 30)

Dr.

15,030

To Bank A/c

(Bill dishonored)

15,030

June 5

Nisha

Dr.

150

To Interest A/c

(Due Interest)

150

June 5

Cash A/c

Dr.

3,030

Bills Receivable (New) A/c (12,000 + 150)

Dr.

12,150

To Nisha

15,180

(Received New Acceptance)

Working Notes 1:Evaluating discount amount

Discount Amount = \(\frac{15,000\, X\, 10\, X\, 3}{100\, X\, 12}\) = ₹375

Working Notes 2: Evaluating interest amount

Interest Amount = \(\frac{12,000\, X\, 15\, X\, 1}{100\, X\, 12}\) = ₹150

Nisha’s Journal

Date

Particulars

L.F.

Debit ₹

Credit ₹

2016

March 2

Purchases A/c

Dr.

19,000

To Asha

19,000

(Purchased goods)

March 2

Asha

Dr.

19,000

To Cash A/c

4,000

To Bills Payable A/c

15,000

(Received acceptance)

June 5

Bills Payable A/c

Dr.

15,000

Noting Charges A/c

Dr.

30

To Asha

15,030

(Dishonored Bill)

June 5

Interest A/c

Dr.

150

To Asha

150

(Due Interest)

June 5

Asha

Dr.

15,180

To Bills Payable A/c (12,000+150)

12,150

To Cash A/c

(Received New Acceptance)

3,030

Question 19

A sold goods for ₹ 40,000 to B on Jan. 01, 2017. He drew upon B a bill of exchange for the same amount payable after 1 month. B accepted the bill and sent it back to A. A discounted the bill immediately with his bank @ 9% p.a. On the due date B dishonoured the bill of exchange and the bank paid ₹ 200 as noting charges. B requested A to draw a new bill upon him with interest @ 12% p.a. which he agreed. The new bill was payable after 1 month. One week before the maturity of the second bill B requested A to cancel the second bill. He further requested to accept ₹ 15,000 in cash immediately and draw a third bill upon him including interest of ₹ 1,000. A agreed to B’s request. The third bill was payable after one month. B met the third bill on its maturity. Record the necessary journal entries in the books of A and B and also prepare B’s account in the books of A and A’s account in the books of B.

Solution:

Journal Books of A

Date

Particulars

L.F.

Debit ₹

Credit ₹

2017

January 1

B’s A/c

Dr.

40,000

To Sales A/c

40,000

(Goods sold to B)

January 1

Bills Receivable A/c

Dr.

40,000

To B’s A/c

40,000

(B Accepted the bill)

January 1

Bank A/c

Dr.

39,700

Discount Charges A/c

Dr.

300

To Bills Receivable A/c

40,000

(Bill discounted with the bank @ 9% p.a. for 1 month)

February 4

B’s A/c

Dr.

40,200

To Bank A/c

40,200

(Bill dishonoured on due and noting charges paid)

February 4

B’s A/c

Dr.

402

To Interest A/c

402

(Interest due to be received)

February 4

Bills Receivable A/c

Dr.

40,602

To B’s A/c

40,602

(B accepted the new bill)

February 28

B’s A/c

Dr.

40,602

To Bills Receivable A/c

40,602

(New bill dishonoured)

February 28

B’s A/c

Dr.

1,000

To Interest A/c

1,000

(Interest due to be received)

February 28

Cash A/c

Dr.

15,000

To B’s A/c

15,000

(Cash received from B)

February. 28

Bills Receivable A/c

Dr.

26,602

To B’s A/c

26,602

(B accepted the new bill)

March 31

Cash A/c

Dr.

26,602

To Bills Receivable A/c

26,602

(Bill honoured on due date)

B’s Account

Dr.

Cr.

Date

Particulars

J.F.

Amount

Date

Particulars

J.F.

Amount₹

2017

2017

January 1

Sales A/c

40,000

January 1

Bills Receivable A/c

40,000

February 4

Bank A/c

40,200

February 4

Bills Receivable A/c

40,602

February 4

Interest A/c

402

February 28

Cash A/c

15,000

February 28

Bills Receivable A/c

40,602

February 28

Bills Receivable A/c

26,602

February 28

Interest A/c

1,000

1,22,204

1,22,204

Journal Books of B

Date

Particulars

L.F.

Debit ₹

Credit ₹

2017

January 1

Purchases A/c

Dr.

40,000

To A’s A/c

40,000

(Goods purchased from A)

January 1

A’s A/c

Dr.

40,000

To Bills Payable A/c

40,000

(Bill drawn by A, accepted)

February 4

Bills Payable A/c

Dr.

40,000

Noting Charges A/c

Dr.

200

To A’s A/c

40,200

(Bill dishonoured on due date and noting charges paid)

February 4

Interest A/c

Dr.

402

To A’s A/c

402

(Interest due to be paid)

February 4

A’s A/c

Dr.

40,602

To Bills Payable A/c

40,602

(New bill drawn by A, accepted)

February 28

Bills Payable A/c

Dr.

40,602

To A’s A/c

40,602

(New bill dishonoured)

February 28

Interest A/c

Dr.

1,000

To A’s A/c

1,000

(Interest due to be paid)

February 28

A’s A/c

Dr.

15,000

To Cash A/c

15,000

(Cash paid to A)

Feb. 28

A’s A/c

26,602

To Bills Payable A/c

26,602

(New bill drawn by A, accepted)

March 31

Bills Payable A/c

Dr.

26,602

To Cash A/c

26,602

(Bill honoured on due date)

A’s Account

Dr.

Cr.

Date

Particulars

J.F.

Amount

Date

Particulars

J.F.

Amount

2017

2017

January 1

Bills Payable A/c

40,000

January 1

Purchases A/c

40,000

February 4

Bills Payable A/c

40,602

January 1

Bills Payable A/c

40,000

February 28

Cash A/c

15,000

February 4

Noting Charges A/c

200

February 28

Bills Payable A/c

26,602

February 4

Interest A/c

402

February 28

Bills Payable A/c

40,602

February 28

Interest A/c

1,000

1,22,204

1,22,204

Working Notes 1 : Evaluating Discounting Charges

Discounting Charges= 40,000 X \(\frac{9}{100}\) X \(\frac{1}{12}\) = ₹ 300

Working Notes 2 : Evaluating Interest Amount

Interest Amount= 40,200 X \(\frac{12}{100}\) X \(\frac{1}{12}\) = ₹ 402

Question 20

Journalise the following transaction in the books of Rajni:

Geeta’s acceptance of ₹ 20,000 which had been discounted with the bank for ₹ 19,500 has been returned by the Bank dishonoured. Noting charges paid by Bank ₹ 25.

Solution:

Journal Books of Rajni

Date

Particulars

L.F.

Debit ₹

Credit ₹

Geeta

Dr.

20,025

To Bank A/c

20,025

(Discounted bill dishonoured and noting charges paid)

Question 21(A)

A Bill receivable for ₹ 10,000, which had been discounted for ₹ 9,700, is dishonoured and the Bank paid ₹ 20 as noting charges.

Pass entries in the books of drawer and drawee.

Solution:

Journal Books of Drawer

Date

Particulars

L.F.

Debit ₹

Credit ₹

Drawee’s A/c

Dr.

10,020

To Bank A/c

10,020

(Discounted bill dishonoured and noting charges paid)

Journal Books of Drawee

Date

Particulars

L.F.

Debit ₹

Credit ₹

Bills Payable A/c

Dr.

10,000

Noting Charges A/c

Dr.

20

To Drawer’s A/c

10,020

(Bills dishonoured and noting charges paid)

Question 21(B)

Journalise the following in the books of X:

Y‘s acceptance for ₹ 2,00,000 which was discounted by X from the bank has been dishonoured, noting charges paid by bank being ₹ 100.

Solution:

Journal Books of X

Date

Particulars

L.F.

Debit ₹

Credit ₹

Y’s A/c

Dr.

2,00,100

To Bank A/c

2,00,100

(Discounted bill dishonoured and noting charges paid)

Question 22

On 10th April, 2018, Ravi purchased from Mohan goods for ₹ 30,000 plus CGST and SGST @ 9% each. Ravi paid ₹ 15,400 in cash and accepted a bill for two months for the balance amount drawn on him by Mohan. Mohan endorsed the bill to Rakesh. The bill was dishonoured on the due date. Rakesh had to spend ₹ 100 as noting charges.

Immediately after the dishonour, Mohan accepted a new bill drawn by Rakesh, in which ₹ 200 for interest were also included. After 20 days of the dishonour of the bill, Ravi paid full amount of Mohan including ₹ 50 as interest. Show Journal entries in the books of Ravi, Mohan and Rakesh.

Solution:

Journal Books of Mohan

Date

Particulars

L.F.

Debit ₹

Credit ₹

2018

April 10

Ravi

Dr.

35,400

To Sales A/c

30,000

To Output CGST A/c

2,700

To Output SGST A/c

2,700

(Sold goods plus 9% intra-state GST)

April 10

Bills Receivable A/c

Dr.

20,000

Cash A/c

Dr.

15,400

To Ravi

35,400

(Ravi paid in portion and remaining amount was accepted in bill)

April 10

Rakesh

Dr.

20,000

To Bills Receivable A/c

20,000

(Bill endorsed in favour of Rakesh)

June 13

Ravi

Dr.

20,100

To Rakesh

20,100

(On due date bill was dishonoured and noting charges to be paid)

June 13

Interest A/c

Dr.

200

To Rakesh

200

(Due interest to be paid to Rakesh)

June 13

Rakesh

Dr.

20,300

To Bills Payable A/c

20,300

(Bill withdrawn by Rakesh, accepted)

July 3

Ravi

Dr.

50

To Interest A/c

50

(Due interest to be received)

July 3

Cash A/c

Dr.

20,150

To Ravi

20,150

(Received cash from Ravi)

Journal Books of Ravi

Date

Particulars

L.F.

Debit ₹

Credit ₹

2018

April 10

Purchases A/c

Dr.

30,000

Input CGST A/c

Dr.

2,700

Input SGST A/c

Dr.

2,700

To Mohan

35,400

(Purchased goods with 9% intra-state GST)

April 10

Mohan

Dr.

35,400

To Bills Payable A/c

20,000

To Cash A/c

15,400

(Made portion of payment and remaining amount bill drawn by Mohan, accepted)

June 13

Bills Payable A/c

Dr.

20,000

Noting Charges A/c

Dr.

100

To Mohan

20,100

(Bill dishonoured on due date and noting charges to be paid)

July 3

Interest A/c

Dr.

50

To Mohan

50

(Due interest to be paid)

July 3

Mohan

Dr.

20,150

To Cash A/c

20,150

(Paid cash to Mohan)

Books of Rakesh

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2018

April 10

Bills Receivable A/c

Dr.

20,000

To Mohan

20,000

(Bill receivable received from Mohan)

June 13

Mohan

Dr.

20,100

To Bills Receivable A/c

20,000

To Cash A/c

100

(On due date bill dishonoured and noting paid charged)

June 13

Mohan

Dr.

200

To Interest A/c

200

(Due interest to be received)

June 13

Bills Receivable A/c

Dr.

20,300

To Mohan

20,300

(New bill accepted by Mohan)

Question 23

On March 4, 2017, A purchased from B goods for ₹ 50,000. A paid 40% immediately and for the balance gave a promissory note to B payable after 30 days. B immediately endorsed the promissory note in favour of his creditor C for the full settlement of a debt of ₹ 31,000. On the due date the bill was dishonoured and C paid ₹ 100 as noting charges. On the same date C informed B about the dishonour of the bill. B settled his debt to C by cheque for ₹ 30,100 which includes noting charges. A settled B‘s claim by cheque for the same amount.

Record the necessary journal entries in the books of A, B and C for the above transactions and prepare A‘s and C‘s accounts in the books of B, B‘s account in the books of A and also B‘s account in the books of C.

Solution:

Journal Books of B

Date

Particulars

L.F.

Debit ₹

Credit ₹

2017

March 4

A’s A/c

Dr.

50,000

To Sales A/c

(Sold goods to A)

50,000

March 4

Cash A/c

Dr.

20,000

Bills Receivable A/c

Dr.

30,000

To A’s A/c

50,000

(Cas received 40% and remaining amount A accepted promissory note)

March 4

C’s A/c

Dr.

31,000

To Bills Receivable A/c

30,000

To Discount Received A/c

1,000

(Promissory note endorsed in favour of C)

April 6

A’s A/c

Dr.

30,100

To C

30,100

(On the due date the promissory note was dishonoured and paid noting charges by C)

April 6

C’s A/c

Dr.

31,100

To Bank A/c

30,100

(Paid cheque to C)

April 6

Bank A/c

Dr.

30,100

To A’s A/c

30,100

(Received cheque from A)

A’s Account

Dr.

Cr.

Date

Particulars

J.F.

Amount ₹

Date

Particulars

J.F.

Amount ₹

2017

2017

March4

Sales A/c

50,000

March 4

Cash A/c

20,000

April 6

C’s A/c

30,100

March 4

Bills Receivable A/c

30,000

April 6

Bank A/c

30,100

80,100

80,100

C’s Account

Dr.

Cr.

Date

Particulars

J.F.

Amount ₹

Date

Particulars

J.F.

Amount ₹

2017

2017

March 4

Bills Receivable A/c

30,000

March 4

Balance b/d

31,000

March 4

Discount Received A/c

1,000

April 6

A

30,100

April 6

Bank A/c

30,100

61,100

61,100

Journal Books of A

Date

Particulars

L.F.

Debit

Amount

(Rs)

Credit

Amount

(Rs)

2017

March 4

Purchases A/c

Dr.

50,000

To B’s A/c

50,000

(Purchased goods from B)

March 4

B’s A/c

Dr.

50,000

To Cash A/c

20,000

To Bills Payable A/c

30,000

(Paid 40% amount in cash and a promissory note was accepted for the remaining amount)

April 6

Bills Payable A/c

Dr.

30,000

Noting Charges A/c

Dr.

100

To B’s A/c

30,100

(On the due date, promissory note was dishonoured and paid noting charges)

April 6

B’s A/c

Dr.

30,100

To Bank A/c

30,100

(Cheques paid c to B)

B’s Account

Dr.

Cr.

Date

Particulars

J.F.

Amount ₹

Date

Particulars

J.F.

Amount₹

2017

2017

March 4

Cash A/c

20,000

March 4

Purchases A/c

50,000

March 4

Bills Payable A/c

30,000

April 6

Bills Payable A/c

30,000

April 6

Bank A/c

30,100

April 6

Noting Charges A/c

100

80,100

80,100

Books of C

Journal

Date

Particulars

L.F.

Debit ₹

Credit ₹

2017

March 4

Bills Receivable A/c

Dr.

30,000

Discount Allowed A/c

Dr.

1,000

To B’s A/c

(Promissory note received from B)

31,000

April 6

B’s A/c

Dr.

30,100

To Bills Receivable A/c

Dr.

30,000

To Cash A/c

100

(On the due date, promissory note was dishonoured and paid noting charges)

April 6

Bank A/c

Dr.

30,100

To B’s A/c

31,100

(Received cheque from B)

B’s Account

Dr.

Cr.

Date

Particulars

J.F.

Amount₹

Date

Particulars

J.F.

Amount ₹

2017

2017

March 4

Balance b/d

31,000

March 4

Bills Receivable A/c

30,000

April 6

Bills Receivable A/c

30,000

March 4

Discount Allowed A/c

1,000

April 6

Cash A/c

100

April 6

Bank A/c

30,100

61,100

61,100

Question 24

On Feb. 01, 2017, Mohan sold goods worth ₹ 25,000 to Naresh and drew upon him a bill payable after 90 days. Naresh accepted the bill and Mohan endorsed the bill immediately in favour of his creditor Raja in full settlement of his account of ₹ 25,300. One week before the maturity of the bill Naresh requested Mohan to cancel the bill and draw upon him a new bill including interest of ₹ 400. Mohan agreed to it. Mohan immediately took the bill from Raja by making the payment to him and then drew upon Naresh a new bill for 30 days which was duly met by Naresh on due date.

Pass necessary entries in the books of Mohan.

Solution:

Journal Books of Mohan

Date

Particulars

L.F.

Debit ₹

Credit ₹

2017

February 1

Naresh

Dr.

25,000

To Sales A/c

25,000

(Solg goods to Naresh)

February 1

Bills Receivable A/c

Dr.

25,000

To Naresh

25,000

(Bill accepted by Naresh)

February 1

Raja

Dr.

25,300

To Bills Receivable A/c

25,000

To Discount Received A/c

300

(Bills receivable endorsed in favour of Raja)

April 27

Naresh

Dr.

25,000

To Raja

25,000

(Cancelled Bills receivable)

April 27

Raja

Dr.

25,000

To Cash A/c

25,000

(Paid Cash to Raja)

April 27

Naresh

Dr.

400

To Interest A/c

400

(Due interest to be received)

April 27

Bills Receivable A/c

Dr.

25,400

To Naresh

25,400

(New bill accepted by Naresh)

May 30

Cash A/c

Dr.

25,400

To Bills Receivable A/c

25,400

(On the due date bill honoured)

Question 25

A purchased goods for ₹ 15,000 from B on March 01, 2017 and accepted a bill of exchange drawn by B for the same amount. The bill was payable after 60 days. On April 28, B sent the bill to his bank for collection. The bill was duly presented by the bank. A dishonoured the bill and the bank paid ₹ 150 as noting charges.

Record the necessary journal entries for the above transactions in the books of A and B.

Solution:

Journal Books of B

Date

Particulars

L.F.

Debit ₹

Credit ₹

2017

March 1

A’s A/c

Dr.

15,000

To Sales A/c

15,000

(Sold goods to A)

March 1

Bills Receivable A/c

Dr.

15,000

To A’s A/c

15,000

(Bill accepted by A)

April 28

Bill Sent for Collection A/c

Dr.

15,000

To Bills Receivable A/c

15,000

(Bill sent to the bank for collection)

May 3

A’s A/c

Dr.

15,150

To Bill Sent for Collection A/c

15,000

To Bank A/c

150

(On the due date, Bill dishonoured and bank paid noting charges)

Journal Books of A

Date

Particulars

L.F.

Debit ₹

Credit ₹

2017

March 1

Purchases A/c

Dr.

15,000

To B

15,000

(Purchased goods from B)

Mar. 01

B’s A/c

Dr.

15,000

To Bills Payable A/c

15,000

(Bill drawn by B, accepted)

May 03

Bills Payable A/c

Dr.

15,000

Noting Charges A/c

Dr.

150

To B’s A/c

15,150

(On the due date, Bill dishonoured and noting charges paid)

Question 26

Vimal purchased goods ₹ 25,000 from Kamal on Jan. 15, 2017 and accepted a bill of exchange drawn upon him by Kamal payable after two months. On the date of maturity the bill was duly presented for payment. Vimal dishonoured the bill.

Record the necessary journal entries in the books of Kamal and Vimal when :

(i) The bill was retained by Kamal till the date of its maturity.

(ii) The bill was immediately discounted by Kamal with is bank @ 6% p.a.

(iii) The bill was endorsed by Kamal in favour of his creditor Sharad.

(iv) Five days before its maturity the bill was sent by Kamal to his bank for collection.

Solution:

Journal Books of Kamal

Date

Particulars

L.F.

Debit ₹

Credit ₹

2017

January 15

Vimal

Dr.

25,000

To Sales A/c

25,000

(Sold goods to Vimal)

January 15

Bills Receivable A/c

Dr.

25,000

To Vimal

25,000

(Vimal accepted the bill)

(i): Bill retained till maturity

March 18

Vimal

Dr.

25,000

To Bills Receivable A/c

25,000

(On the due date Bill dishonoured)

(ii): Bill discounted @ 6% p.a.with bank

January 15

Bank A/c

Dr.

24,750

Discounting Charges A/c

Dr.

250

To Bills Receivable A/c

25,000

(Bill discounted with bank for 2 months @ 6% p.a.)

March 18

Vimal

Dr.

25,000

To Bank A/c

25,000

(On the due date Bill dishonoured)

(iii): Bill endorsed in favour of Sharad

January 15

Sharad

Dr.

25,000

To Bills Receivable A/c

25,000

(Bill endorsed in favour of Sharad)

March 18

Vimal

Dr.

25,000

To Sharad

25,000

(On the due date Bill dishonoured)

(iv): Bill sent to bank for collection

March 13

Bills Sent for Collection A/c

Dr.

25,000

To Bills Receivable A/c

25,000

(Bill sent to the bank for collection)

March 18

Vimal

Dr.

25,000

To Bills Sent for Collection A/c

25,000

(On the due date Bill dishonoured)

Journal Books of Vimal

Date

Particulars

L.F.

Debit

Credit

2017

January 15

Purchases A/c

Dr.

25,000

To Kamal

25,000

(Purchased Goods from Kamal)

In all the four cases the same entry will be passed

March 18

Bills Payable A/c

Dr.

25,000

To Kamal

25,000

(On the due date Bill dishonoured)

Question 27

X draws upon Y a bill of ₹ 10,000 for three months on 1st July, 2016. The bill was duly accepted and returned by Y. On due date bill became dishonoured and noting charges paid under each of the following circumstances ₹ 75. Pass entries in the following cases:

(i) If drawer retains the bill with him till due date.

(ii) If drawer discounts the same with his Banker and noting charges paid by the Banker.

(iii) If drawer endorses the same to his creditor Z and noting charges paid by Z.

(iv) If drawer sends the bill for collection to his Banker and noting charges paid by the Banker.

Solution:

Journal Books of X

Date

Particulars

L.F.

Debit ₹

Credit ₹

2016

July 1

Bills Receivable A/c

Dr.

10,000

To Y’s A/c

10,000

(Bill accepted by Y)

(i): Bill retains till due date

October 4

Y’s A/c

Dr.

10,075

To Bills Receivable A/c

10,000

To Cash A/c

75

(On the due date bill dishonoured and paid noting charges)

(ii): Bill discounted with the bank

July 1

Bank A/c

Dr.

10,000

To Bills Receivable A/c

10,000

(Bill discounted with bank)

October 4

Y’s A/c

Dr.

10,075

To Bank A/c

10,075

(On the due date bill dishonoured and paid noting charges)

(iii): Bill endorsed to Z

July 1

Z’s A/c

Dr.

10,000

To Bills Receivable A/c

10,000

(Bill endorsed in favour of Z)

October 4

Y’s A/c

Dr.

10,075

To Z

10,075

(Bill dishonoured on due date and noting charges paid by Z)

Case (iv): Bill sent to bank for collection

July 1

Bill Sent for Collection A/c

Dr.

10,000

To Bills Receivable A/c

10,000

(Bill sent to the bank for collection)

October 4

Y’s A/c

Dr.

10,075

To Bill Sent for Collection A/c

10,000

To Bank A/c

75

(On the due date bill dishonoured and paid noting charges)

Journal Books of Y

Date

Particulars

L.F.

Debit ₹

Credit ₹

2016

July 1

X’s A/c

Dr.

10,000

To Bills Payable A/c

10,000

(Bill drawn by X, accepted)

Same entry will be passed in both the cases

October 4

Bills Payable A/c

Dr.

10,000

Noting Charges A/c

Dr.

75

To X’s A/c

10,075

(On the due date bill dishonoured and noting charges paid)

Journal Books of Z

Date

Particulars

L.F.

Debit ₹

Credit ₹

2016

July 01

Bills Receivable A/c

Dr.

10,000

To X’s A/c

10,000

(Bills receivable, received from X)

October 4

X’s A/c

Dr.

10,075

To Bills Receivable A/c

10,000

To Cash A/c

75

(On the due date bill dishonoured and noting charges paid)

Question 28

What Journal entry will be passed in the books of drawer (X) and drawee (Y) at the time of dishonour of bill in the following cases:

(i) If bill of ₹ 50,000 was discounted from bank and noting charges paid by the bank was ₹ 600.

(ii) If B/R of ₹ 50,000 was endorsed in favour of Z. Noting charges paid by Z ₹ 600.

(iii) If B/R is returned with drawer and noting charges were ₹ 600

Solution:

X’s Journal

Sl.no

Particulars

L.F.

Debit ₹

Credit ₹

(i)

Y’s A/c

Dr.

50,600

To Bank A/c

50,600

(Bill dishonored and paid noting charges)

(ii)

Y’s A/c

Dr.

50,600

To Z’s A/c

50,600

(Bill endorsed to Z, dishonored and paid noting charges)

(iii)

Y’s A/c

Dr.

50,600

To Bills Receivable A/c

50,000

To Cash A/c

600

(Bill dishonored and noting charges paid)

Y’s Journal

Sl.no

Particulars

L.F.

Debit ₹

Credit ₹

(i)

Bills Payable A/c

Dr.

50,000

Noting Charges A/c

Dr.

600

To X’s A/c

50,600

(Bill dishonored and paid noting charges)

(ii)

Bills Payable A/c

Dr.

50,000

Noting Charges A/c

Dr.

600

To X’s A/c

50,600

(Bill dishonored and paid noting charges)

(iii)

Bills Payable A/c

Dr.

50,000

Noting Charges A/c

Dr.

600

To X’s A/c

50,600

(Bill dishonored and paid noting charges)

Question 29

A sold goods to B for ₹ 60,000 Charging IGST @18% and immediately drew a bill on B who duly accepted the same. A endorsed the bill to C. C endorsed it to his creditor D. D discounted the bill for ₹ 68,000. On the date of maturity, the bill was dishonoured and Bank paid noting charges amounting to ₹ 200.

Show Journal entries in the books of all the parties to record these transactions.

Solution:

Journal Books of A

Sl.no

Particulars

L.F.

Debit ₹

Credit ₹

i

B’s A/c

Dr.

70,800

To Sales A/c

60,000

To Output IGST A/c

10,800

(Sold goods to B @ 18% Inter-state GST)

ii

Bills Receivable A/c

Dr.

70,800

To B’s A/c

70,800

(B accepted the bill)

iii

C’s A/c

Dr.

70,800

To Bills Receivable A/c

70,800

(Bill endorsed in favour of C)

iv

B’s A/c

Dr.

71,000

To C’s A/c

71,000

(On the due date, bills dishonoured and noting charges receivable from B and payable to C)

Journal Books of B

Date

Particulars

L.F.

Debit ₹

Credit ₹

Purchases A/c

Dr.

60,000

Input IGST A/c

Dr.

10,800

To A’s A/c

70,800

(Purchased goods from A)

A’s A/c

Dr.

70,800

To Bills Payable A/c

70,800

(Bill drawn by A, accepted)

Bills Payable A/c

Dr.

70,800

Noting Charges A/c

Dr.

200

To A’s A/c

71,000

(On the due date, bill dishonoured and paid noting charges)

Journal Books of C

Date

Particulars

L.F.

Debit ₹

Credit ₹

Bills Receivable A/c

Dr.

70,800

To A’s A/c

70,800

(Bills receivable, received from A)

D’s A/c

Dr.

70,800

To Bills Receivable A/c

70,800

(Bill endorsed in favour of D)

A’s A/c

Dr.

71,000

To D’s A/c

71,000

(Bill dishonoured on due date and noting charges receivable from A and payable to D)

Journal Books of D

Date

Particulars

L.F.

Debit ₹

Credit ₹

Bills Receivable A/c

Dr.

70,800

To C’s A/c

70,800

(Bills receivable, received from C)

Bank A/c

Dr.

68,000

Discounting Charges A/c

Dr.

2,800

To Bills Receivable A/c

70,800

(Bill discounted with bank)

C’s A/c

Dr.

71,000

To Bank A/c

71,000

(On the due date, bill dishonoured and bank paid noting charges)

Question 30

On 1st Jan., 2016, Satish drew on Harish three bills of exchange in full settlement of claims, the first for ₹ 14,000 at one month; the second for ₹ 16,000 at two months and the third for ₹ 18,000 at three months. The bills were duly accepted by Harish. The first bill was endorsed by Satish to his creditor Rajnish on 3rd Jan., 2016.

The second bill was discounted on 15th Jan. for ₹ 15,900 and the third bill was sent to bank for collection on 4th Feb. All the bills were met on maturity except the second bill which was dishonoured, noting charges being paid ₹ 240. Satish charged ₹ 300 for interest from Harish and drew on him a fourth bill for two months for ₹ 16,540. The fourth bill was duly met on maturity.

Give Journal entries in the books of Satish and Harish.

Solution:

Journal Books of Satish

Date

Particulars

L.F.

Debit ₹

Credit ₹

2016

January 1

Bills Receivable A/c (1)

Dr.

14,000

Bills Receivable A/c (2)

Dr.

16,000

Bills Receivable A/c (3)

Dr.

18,000

To Harish

48,000

(Bills accepted by Harish)

January 3

Rajnish

Dr.

14,000

To Bills Receivable A/c (1)

14,000

(Bill endorsed in favour of Rajnish)

January 15

Bank A/c

Dr.

15,900

Discounting Charges A/c

Dr.

100

To Bills Receivable A/c (2)

16,000

(Bills discounted with bank @ Rs 100 discount)

February 4

Bill Sent for Collection A/c

Dr.

18,000

To Bills Receivable A/c (3)

18,000

(Bill sent to the bank for collection)

March 4

Harish

Dr.

16,240

To Bank A/c

16,240

(On the due date, bill dishonoured and paid noting charges)

March 4

Harish

Dr.

300

To Interest A/c

300

(Due interest to be received)

March 4

Bills Receivable A/c (4)

Dr.

16,540

To Harish

16,540

(New bill accepted by Harish)

April 4

Bank A/c

Dr.

18,000

To Bills Sent for Collection A/c

18,000

(On the due date, bill dishonoured)

May 7

Cash A/c

Dr.

16,540

To Bills Receivable A/c (4)

16,540

(On the due date, bill dishonoured)

Books of Harish

Journal

Date

Particulars

L.F.

Debit ₹

Credit₹

2016

January 1

Satish

Dr.

48,000

To Bills Payable A/c (1)

14,000

To Bills Payable A/c (2)

16,000

To Bills Payable A/c (3)

18,000

(Bill drawn by Satish, accepted)

February 4

Bills Payable A/c (1)

Dr.

14,000

To Cash A/c

14,000

(On the due date, bill honoured)

March 4

Bills Payable A/c (2)

Dr.

16,000

Noting Charges A/c

Dr.

240

To Satish

16,240

(On the due date, bill honoured and paid noting charges)

March 4

Interest A/c

Dr.

300

To Satish

300

(Due interest to be paid)

March 4

Satish

Dr.

16,540

To Bills Payable A/c (4)

16,540

(New bill drawn by Satish, accepted)

April 4

Bills Payable A/c (3)

Dr.

18,000

To Cash A/c

18,000

(On the due date, bill honoured)

May 7

Bills Payable A/c (4)

Dr.

16,540

To Cash A/c

16,540

(On the due date, bill honoured)

Question 31

A sold goods to B on 30th October, 2016 for ₹ 14,000 and received three bills for ₹ 2,000, ₹ 4,000 and ₹ 8,000 at 2, 3 and 4 months duration respectively. He kept the first bill till maturity; endorsed the 2nd bill in favour of his creditor C and discounted the third bill on 3rd December, 2016 @18% p.a. The first and 2nd bills were duly met on maturity but the third bill was dishonoured, the bank paying ₹ 40 as noting charges. On 3rd March, 2017, B paid ₹ 3,000 and the noting charges in cash and accepted a new bill at 3 months after the date for the balance plus ₹ 150 as interest. The new bill was met on maturity. Give Journal entries in the books of A and B both.

Solution:

Journal Books of A

Date

Particulars

L.F.

Debit ₹

Credit ₹

2016

October 30

B’s A/c

Dr.

14,000

To Sales A/c

14,000

(Goods sold to B)

October 30

Bills Receivable A/c (1)

Dr.

2,000

Bills Receivable A/c (2)

Dr.

4,000

Bills Receivable A/c (3)

Dr.

8,000

To B’s A/c

14,000

(B accepted bills)

October 30

C’s A/c

Dr.

4,000

To Bills Receivable A/c (2)

4,000

(Bill endorsed in favour of C)

December3

Bank A/c

Dr.

7,640

Discounting Charges A/c

Dr.

360

To Bills Receivable A/c (3)

8,000

(Bill discounted with the bank for 3 months @ 18 p.a.)

2017

January 2

Cash A/c

Dr.

2,000

To Bills Receivable A/c (1)

2,000

(On the due date, bill honoured)

March 3

B’s A/c

Dr.

8,040

To Bank A/c

8,040

(On the due date, bill honoured and bank paid noting charges)

March 3

Cash A/c

Dr.

3,040

To B’s A/c

3,040

(Received cash from B)

March 3

B’s A/c

Dr.

150

To Interest A/c

150

(Due interest to be received)

March 3

Bills Receivable A/c

Dr.

5,150

To B’s A/c

5,150

(New bill accepted by B)

June 06

Cash A/c

Dr.

5,150

To Bills Receivable A/c

5,150

(On the due date, bill honoured)

Journal Books of B

Date

Particulars

L.F.

Debit ₹

Credit ₹

2016

October 30

Purchases A/c

Dr.

14,000

To A

14,000

(Goods purchased from A)

October 30

A

Dr.

14,000

To Bills Payable A/c (1)

2,000

To Bills Payable A/c (2)

4,000

To Bills Payable A/c (3)

8,000

(Bill drawn by A, accepted)

2017

January 2

Bills Payable A/c (1)

Dr.

2,000

To Cash A/c

2,000

(Bill honoured on due date)

February 2

Bills Payable A/c (2)

Dr.

4,000

To Cash A/c

4,000

(On the due date, bill honoured)

March 3

Bills Payable A/c (3)

Dr.

8,000

Noting Charges A/c

Dr.

40

To A

8,040

(On the due date, bill honoured and noting charges paid)

March 3

A

Dr.

3,040

To Cash A/c

3,040

(Paid cash to A)

March 3

Interest A/c

Dr.

150

To A

150

(Due interest to be paid)

March 3

A

Dr.

5,150

To Bills Payable A/c

5,150

(Bill drawn by A, accepted)

June 6

Bills Payable A/c

Dr.

5,150

To Cash A/c

5,150

(On the due date, bill honoured)

Working Note: Evaluating discounting charges

Discounting charges = 8,000 X \(\frac{18}{100}\) X \(\frac{3}{12}\) = ₹ 360

Question 32

On 1st January, 2010, Arun purchased from Barun goods invoiced at ₹ 10,000. On the same date, Barun drew upon Arun a bill for the amount at 2 months and Arun accepted the same. On 4th January, 2010, Barun got the bill discounted with his bank @12% per annum. On due date, Arun told Barun that he was not in a position to pay the full amount and requested Barun to accept ₹ 5,000 in cash and draw a fresh bill at 2 months for the remaining amount plus interest at 15% per annum, Barun agreed. The second bill was duly met on the due date.

Give journal entries to record the above transactions in the books of Barun.

Solution:

Journal Books of Barun

Date

Particulars

L.F.

Debit ₹

Credit ₹

2010

January 1

Arun

Dr.

10,000

To Sales A/c

10,000

(Sold goods to Arun)

January 1

Bills Receivable A/c

Dr.

10,000

To Arun

10,000

(Arun accepted the bill)

January 4

Bank A/c

Dr.

9,800

Discounting Charges A/c

Dr.

200

To Bills Receivable A/c

10,000

(Bill discounted with the bank for 2 months @ 12% p.a.)

Mach 4

Arun

Dr.

10,000

To Bank A/c

10,000

(On the due date bill cancelled)

March 4

Cash

Dr.

5,000

To Arun

5,000

(Received cash from Arun)

March 4

Arun

Dr.

125

To Interest A/c

125

(Due interest to be received)

March 4

Bills Receivable A/c

Dr.

5,125

To Arun

5,125

(New bill accepted by Arun)

May 7

Cash A/c

Dr.

5,125

To Bills Receivable A/c

5,125

(On the due date, bill honoured)

Working Note 1: Evaluating discounting charges

Discounting charges = ₹10,000 X \(\frac{12}{100}\) X \(\frac{2}{12}\) = ₹ 200

Working Note 2: Evaluating amount of interest

Amount of Interest = ₹5,000 X \(\frac{15}{100}\) X \(\frac{2}{12}\) = ₹ 125

Question 33

Darshan sold goods for ₹ 40,000 to Varun on 8.1.2017 and drew upon him a bill of exchange payable after two months. Varun accepted the bill and returned the same to Darshan. On the due date the bill was met by Varun. Record the necessary Journal entries in the books of Darshan and Varun in the following circumstances:

1. When the bill was retained by Darshan till the date of its maturity.

2. When Darshan immediately discounted the bill @6% p.a. with his bank.

3. When the bill was endorsed immediately by Darshan in favour of his creditor Suresh.

4. When three days before its maturity, the bill was sent by Darshan to his bank for collection.

Solution:

Journal Books of Darshan

Date

Particulars

L.F.

Debit ₹

Credit ₹

2017

January 8

Varun

Dr.

40,000

To Sales A/c

40,000

(Sold goods to Varun)

January 8

Bills Receivable A/c

Dr.

40,000

To Varun

40,000

(Varun accepted the bill)

1 : Bill retained till maturity

March 11

Cash A/c

Dr.

40,000

To Bills Receivable A/c

40,000

(On the due date, bill honoured)

2: Bill discounted with the bank

January 8

Bank A/c

Dr.

39,600

Discounting Charges A/c

Dr.

400

To Bills Receivable A/c

40,000

(Bills discounted with the bank for 2 months @ 6% p.a.)

3: Bill endorsed in favour of Suresh

January 8

Suresh

Dr.

40,000

To Bills Receivable A/c

40,000

(Bill endorsed in favour of Suresh)

4: Bill sent to bank for collection

March 11

Bill Sent for Collection A/c

Dr.

40,000

To Bills Receivable A/c

40,000

(Bills sent to bank for payment)

March 11

Bank A/c

Dr.

5,125

To Bill Sent for Collection A/c

5,125

(On the due date, bill honoured)

Journal Books of Varun

Date

Particulars

L.F.

Debit ₹

Credit ₹

2017

January 8

Purchases A/c

Dr.

40,000

To Darshan

40,000

(Purchased goods from Darshan)

January 8

Darshan

Dr.

40,000

To Bills Payable A/c

40,000

(Bill drawn by Darshan, accepted)

In all four cases same entry will be passed

March 11

Bills Payable A/c

Dr.

40,000

To Cash A/c

40,000

(On the due date, bill honoured)

Working Note: Evaluating discounting Charges

Discounting charges = ₹40,000 X \(\frac{6}{100}\) X \(\frac{2}{12}\) = ₹ 400

Question 34

On Jan. 1, 2017 Neha sold goods for ₹ 20,000 to Muskan and drew upon her a bill of exchange payable after two months. One month before the maturity of the bill Muskan approached Neha to accept the payment against the bill at a rebate @12% p.a. Neha agreed to the request of Muskan and Muskan retired the bill under the agreed rate of rebate.

Journalise the above transactions in the books of Neha and Muskan.

Solution:

Journal Books of Neha

Date

Particulars

L.F.

Debit ₹

Credit ₹

2017

January 1

Muskan

Dr.

20,000

To Sales A/c

20,000

(Sold goods to Muskan)

January 1

Bills Receivable A/c

Dr.

20,000

To Muskan

20,000

(Muskan accepted the bill)

February 4

Cash A/c

Dr.

19,800

Rebate A/c

Dr.

200

To Bills Receivable A/c

20,000

(Bill retired under the rebate @ 12% p.a. for 1 month)

Journal Books of Muskan

Date

Particulars

L.F.

Debit ₹

Credit ₹

2017

January 1

Purchases A/c

Dr.

20,000

To Neha

20,000

(Purchased goods from Neha)

January 1

Neha

Dr.

20,000

To Bills Payable A/c

20,000

(Bill drawn by Neha, accepted)

February 4

Bills Payable A/c

Dr.

20,000

To Cash A/c

19,800

To Rebate A/c

200

(Bill retired before one month under the rebate of 12% p.a.)

Working Note: Evaluating amount of Rebate

Amount of Rebate= 20,000X \(\frac{12}{100}\) X \(\frac{1}{12}\) = ₹ 200

Question 35

Leena sold goods to Meena on March 01, 2009 for ₹ 68,000 and drew two bills of exchange of the equal amount upon Meena payable after three months. Leena immediately discounted the first bill with her bank at 12% p.a. The bill was dishonoured by Meena and Bank paid ₹ 55 as noting charges.

The second bill was retired on May 04, 2009 under a rebate of 6% p.a. with mutual agreement.

Journalise the above in the books of Leena and Meena.

Solution:

Journal Books of Leena

Date

Particulars

L.F.

Debit ₹

Credit ₹

2009

March 1

Meena

Dr.

68,000

To Sales A/c

68,000

(Sold goods to Meena)

March 1

Bills Receivable A/c (1)

Dr.

34,000

Bills Receivable A/c (2)

Dr.

34,000

To Meena

68,000

(Meena accepted bills)

March 1

Bank A/c

Dr.

32,980

Discounting Charges A/c

Dr.

1,020

To Bills Receivable A/c

34,000

(Bill discounted for 3 months with bank @ 12% p.a.)

May 4

Cash A/c

Dr.

33,830

Rebate A/c

Dr.

170

To Bills Receivable A/c (2)

34,000

(Bill retired for 1 month under the rebate of 6% p.a.)

June 4

Meena

Dr.

34,055

To Bank A/c

34,055

(On the due date, bill dishonoured and bank paid noting charges)

Journal Books of Meena

Date

Particulars

L.F.

Debit ₹

Credit₹

2009

March 1

Purchases A/c

Dr.

68,000

To Leena

68,000

(Purchased goods from Leena)

March 1

Leena

Dr.

68,000

To Bills Payable A/c (1)

34,000

To Bills Payable A/c (2)

34,000

(Bills drawn by Leena, accepted)

May 4

Bills Payable A/c (2)

Dr.

34,000

To Cash A/c

33,830

To Rebate A/c

170

(Bill retired for 1 month under the rebate of 6% p.a.)

June 4

Bills Payable A/c (1)

Dr.

34,000

Noting Charges A/c

Dr.

55

To Leena

34,055

(On the due date,bill dishonoured and paid noting charges)

Working Notes 1: Evaluating discounting charges

Discounting charges = ₹34,000 X \(\frac{12}{100}\) X \(\frac{3}{12}\) = ₹ 1,020

Working Notes 2: Evaluating amount of rebate

Amount of rebate = ₹34,000 X \(\frac{6}{100}\) X \(\frac{1}{12}\) = ₹ 170

Question 36

Anita purchased goods for ₹ 23,000 from Kavita on October 15, 2009 and accepted a bill of exchange drawn upon her by Kavita payable after two months. On the date of maturity the bill was duly presented for payment. Anita dishonoured the bill. The payee noted with ₹ 95 as noting charges.

Record the necessary journal entries in the books of Kavita and Anita, when (a) The bill was immediately discounted by Kavita with her Bank @ 9% p.a. (b) The bill was endorsed by Kavita in favour of her creditor Shankar after one month.

Solution:

Journal Books of Kavita

Date

Particulars

L.F.

Debit ₹

Credit ₹

2009

October 15

Anita

Dr.

23,000

To Sales A/c

23,000

(Sold goods to Anita)

October 15

Bills Receivable A/c

Dr.

23,000

To Anita

23,000

(Anita accepted the bill)

(a): Bill discounted with the bank

October 15

Bank A/c

Dr.

22,655

Discounting Charges A/c

Dr.

345

To Bills Receivable A/c

23,000

(Bills discounted for 2 months with the bank @ 9% p.a.)

December 18

Anita

Dr.

23,095

To Bank A/c

23,095

(On the due date, bill dishonoured and bank paid noting charges)

(b): Bill endorsed in favour of Shankar

October 15

Shankar

Dr.

23,000

To Bills Receivable A/c

23,000

(Bill endorsed in favour of Shankar)

December 18

Anita

Dr.

23,095

To Shankar

23,095

(On the due date, bill dishonoured and noting charges are payable by Anita and receivable by Shankar)

Journal Books of Anita

Date

Particulars

L.F.

Debit ₹

Credit ₹

2009

October 15

Purchases A/c

Dr.

23,000

To Kavita

23,000

(Purchased goods from Kavita)

October 15

Kavita

Dr.

23,000

To Bills Payable A/c

23,000

(Bill drawn by Kavita, accepted)

In both cases, the same entry will be passed

December 18

Bills Payable A/c

Dr.

23,000

Noting Charges A/c

Dr.

95

To Kavita

23,095

(On the due date, bill dishonoured and paid noting charges)

Working Note: Evaluation of Discounting Charges

Discounting charges = ₹23,000 X \(\frac{9}{100}\) X \(\frac{2}{12}\) = ₹ 345

Question 37

Abdulla sold goods to Tahir on Jan. 17, 2017 for ₹ 18,000. He drew a bill of exchange for the same amount on Tahir for 45 days. On the same date Tahir accepted the bill and returned it to Abdulla. On the due date Abdulla presented the bill to Tahir which was dishonoured. Abdulla paid ₹ 40 as noting charges. Five days after the dishonour of his acceptance Tahir settled his debt by making a payment of ₹ 18,700 including interest and noting charges.

Record the necessary journal entries in the books of Abdulla and Tahir. Also prepare Tahir’s account in the books of Abdulla and Abdulla’s account in the books of Tahir.

Solution:

Journal Books of Abdulla

Date

Particulars

L.F.

Debit ₹

Credit ₹

2017

January 17

Tahir

Dr.

18,000

To Sales A/c

18,000

(Sold goods to Tahir)

January 17

Bills Receivable A/c

Dr.

18,000

To Tahir

18,000

(Bill accepted by Tahir)

March 6

Tahir

Dr.

18,040

To Bills Receivable A/c

18,000

To Cash A/c

40

(On the due date, bill dishonoured and paid noting charges)

March 11

Tahir (18,700 – 18,040)

Dr.

660

To Interest A/c

660

(Due interest to be received)

March 11

Cash A/c

Dr.

18,700

To Tahir

18,700

(Received cash from Tahir)

Tahir’s Account

Dr.

Cr.

Date

Particulars

J.F.

Amount ₹

Date

Particulars

J.F.

Amount₹

2017

2017

January 17

Sales A/c

18,000

January 17

Bills Receivable A/c

18,000

March 6

Bills Receivable A/c

18,000

March 11

Cash A/c

18,700

March 6

Cash A/c

40

March 11

Interest A/c

660

36,700

36,700

Journal Books of Tahir

Date

Particulars

L.F.

Debit ₹

Credit ₹

2017

January 1

Purchases A/c

Dr.

18,000

To Abdulla

18,000

(Purchased goods from Abdulla)

January 1

Abdulla

Dr.

18,000

To Bills Payable A/c

18,000

(Bill drawn by Abdulla, accepted)

March 6

Bills Payable A/c

Dr.

18,000

Noting Charges A/c

Dr.

40

To Abdulla

18,040

(On the due date, bill dishonoured and paid noting charges)

March 11

Interest A/c (18,700 – 18,040)

Dr.

660

To Abdulla

660

(Interest due to be paid)

March 11

Abdulla

Dr.

18,700

To Cash A/c

18,700

(Cash paid to Abdulla)

Abdulla’s Account

Dr.

Cr.

Date

Particulars

J.F.

Amount

Date

Particulars

J.F.

Amount₹

2017

2017

January 17

Bills Payable A/c

18,000

January 17

Purchases A/c

18,000

March 11

Cash A/c

18,700

March 6

Bills Payable A/c

18,000

March 6

Noting Charges A/c

40

March 11

Interest A/c

660

36,700

36,700

Question 38

X sold goods to Y on 1.3.2017 for ₹ 12,000 and drew upon Y a bill of exchange for the same amount payable after two months. X immediately discounted the bill with his bank at 9% p.a. The maturity date of the bill was a non business day (holiday), therefore, X had to present the bill as per the provisions of the Indian Instruments Act, 1881. The bill was dishonoured by Y and X paid ₹ 45 as noting charges. Y settled the claim of X five days after the dishonour of the bill by a cheque which included interest @ 12% for the term of the bill.

Journalise the above transactions in the books of X and Y and prepare Y‘s account in the books of X and X‘s account in the books of Y.

Solution:

Journal Books of X

Date

Particulars

L.F.

Debit ₹

Credit ₹

2017

March 1

Y

Dr.

12,000

To Sales A/c

12,000

(Sold goods to Y)

March 1

Bills Receivable A/c

Dr.

12,000

To Y

12,000

(Y accepted the bill)

March 1

Bank A/c

Dr.

11,820

Discounting Charges A/c

Dr.

180

To Bills Receivable A/c

12,000

(Bills discounted for 2 month with the bank @ 9% p.a.)

May 3

Y

Dr.

12,045

To Bank A/c

12,045

(On the due date, bills dishonoured and paid noting charges)

May 8

Y

Dr.

241

To Interest A/c

241

(Due interest to be received)

May 8

Bank A/c

Dr.

12,286

To Y

12,286

(Received cheque from Y)

Y’s Account

Dr.

Cr.

Date

Particulars

J.F.

Amount

Date

Particulars

J.F.

Amount

2017

2017

March 1

Sales A/c

12,000

March 1

Bills Receivable A/c

12,000

May 3

Bank A/c

12,045

May 8

Bank A/c

12,286

May 8

Interest A/c

241

24,286

24,286

Journal Books of Y

Date

Particulars

L.F.

Debit

Credit

2017

March 1

Purchases A/c

Dr.

12,000

To X

12,000

(Purchased goods from X)

March 1

X

Dr.

12,000

To Bills Payable A/c

12,000

(Bill drawn by X, accepted)

May 3

Bills Payable A/c

Dr.

12,000

Noting Charges A/c

Dr.

45

To X

12,045

(On the due date, bill dishonoured and paid noting charges)

May 8

Interest A/c

Dr.

241

To X

241

(Due interest to be paid)

May 8

X

Dr.

12,286

To Bank A/c

12,286

(Issued cheque from X)

X’s Account

Dr.

Cr.

Date

Particulars

J.F.

Amount

Date

Particulars

J.F.

Amount

2017

2017

March 1

Bills Payable A/c

12,000

March1

Purchases A/c

12,000

May 8

Bank A/c

12,286

May 3

Bills Payable A/c

12,000

May 3

Noting Charges A/c

45

May 8

Interest A/c

241

24,286

24,286

Working Notes 1: Evaluating discounting charges

Discounting charges = ₹12,000 X \(\frac{9}{100}\) X \(\frac{2}{12}\) = ₹ 180

Working Notes 2: Evaluating Amount of Interest

Amount of Interest = ₹12,045 X \(\frac{12}{100}\) X \(\frac{2}{12}\) = ₹ 241

Note: In this account, since the due date May 4, 2017 falls on a holiday, so the due date will be on the preceding date i.e May 03, 2017.

Question 39

On 1st February 2018, A sold goods to B for ₹ 40,000 Charging CGST and SGST @ 9% each. B pays ₹ 17,200 in cash and accepted a three months bill for the balance. On the due date, B expressed his inability to meet the bill and offered ₹ 12,000 in cash and to accept a new bill for one month for the balance plus interest at 18% p.a. A agrees to the proposal. On the due date the bill was duly honoured by B. Pass entries in the books of A and B.

Solution:

Journal Books of A

Date

Particulars

L.F.

Debit ₹

Credit ₹

2018

February 1

B A/c

Dr.

47,200

To Sales A/c

40,000

To Output CGST A/c

3,600

To Output SGST A/c

3,600

(Sold goods to B @ 9% intra-state GST)

February 1

Cash A/c

Dr.

17,200

Bills Receivable A/c

Dr.

30,000

To B’s A/c

40,000

(Received ₹ 17,200 in cash from B and remaining amount accepted by bill)

May 4

B A/c

Dr.

30,000

To Bills Receivable A/c

30,000

(On the due date, bill cancelled)

May 4

Cash

Dr.

12,000

To B’s A/c

12,000

(Received ₹ 12,000 in cash from B)

May 04

B A/c

Dr.

270

To Interest A/c

270

(Due interest to be received)

May 04

Bills Receivable A/c

Dr.

18,270

To B’s A/c

18,270

(New bill accepted by B)

June 07

Cash A/c

Dr.

18,270

To Bills Receivable A/c

18,270

(On the due date, bill honoured)

Books of B

Journal

Date

Particulars

L.F.

Debit ₹

Credit ₹

2018

February 1

Purchases A/c

Dr.

40,000

Input CGST A/c

Dr.

3,600

Input SGST A/c

Dr.

3,600

To A

47,200

(Purchased goods from A)

February 1

A

Dr.

47,200

To Cash A/c

17,200

To Bills Payable A/c

30,000

(Paid ₹ 17,200 in cash and accepted remaining amount by bill)

May 4

Bills Payable A/c

Dr.

30,000

To A

30,000

(On the due date, bill cancelled)

May 4

A

Dr.

12,000

To Cash A/c

12,000

(Paid ₹12,000 in cash to A)

May 04

Interest A/c

Dr.

270

To A

270

(Due interest to be paid)

May 04

A

Dr.

18,270

To Bills Payable A/c

18,270

(New Bill drawn by A, accepted)

June 07

Bills Payable A/c

Dr.

18,270

To Cash A/c

18,270

(On the due date, bill honoured)

Working Note: Evaluating amount of Interest

Amount of Interest: ₹18,000 X \(\frac{18}{100}\) X \(\frac{1}{12}\) = ₹ 270

Question 40

and the second for two months. The first bill was met on due date but on the due date of the second bill, Y requested that the bill be renewed for a further period of two months. X agreed provided that interest at 15% p.a. was paid immediately in cash. Y agreed to this. The second bill was met on the due date.

Give journal entries in the books of X and Y.

Solution:

Journal Books of X

Date

Particulars

L.F.

Debit ₹

Credit ₹

2018

January 15

Y

Dr.

56,000

To Sales A/c

50,000

To Output IGST A/c

6,000

(Sold goods to Y @ 12% inter-state GST)

January 15

Bills Receivable A/c (1)

Dr.

25,000

Bills Receivable A/c (2)

Dr.

25,000

Cash A/c

Dr.

6,000

To Y

56,000

(Y accepted bills)

February 18

Cash A/c

Dr.

25,000

To Bills Receivable A/c (1)

25,000

(On the due date, bill honoured)

March 18

Y

Dr.

25,000

To Bills Receivable A/c (2)

25,000

(On the due date, bill honoured cancelled)

March 18

Y

Dr.

625

To Interest A/c

625

(Due interest to be paid)

March 18

Cash A/c

Dr.

625

Bills Receivable A/c

Dr.

25,000

To Y

25,625

(Received interest in cash by Y and also a bill accepted by him)

May 21

Cash A/c

Dr.

25,000

To Bills Receivable A/c

25,000

(On the due date, bill honoured)

Journal Books of Y

Date

Particulars

L.F.

Debit ₹

Credit ₹

2018

January 15

Purchases A/c

Dr.

50,000

Input IGST A/c

Dr.

6,000

To X

56,000

(Purchased goods from X)

January 15

X

Dr.

56,000

To Bills Payable A/c (1)

25,000

To Bills Payable A/c (2)

25,000

To Cash A/c

6,000

(X withdrew bills, accepted)

February 18

Bills Payable A/c (1)

Dr.

25,000

To Cash A/c

25,000

(On the due date, bill honoured)

March 18

Bills Payable A/c (2)

Dr.

25,000

To X

25,000

(On the due date, bill cancelled)

March 18

Interest A/c

Dr.

625

To X

625

(Due interest paid)

March 18

X

Dr.

25,625

To Cash A/c

625

To Bills Payable A/c

25,000

(Paid Interest in cash and X drew a new bill was accepted)

May 21

Bills Payable A/c

Dr.

25,000

To Cash A/c

25,000

(On the due date, bill honoured)

Working Note: Evaluating amount of Interest

Discounting charges = ₹25,000 X \(\frac{15}{100}\) X \(\frac{2}{12}\) = ₹ 625

Question 41

On 1st January 2017, Amar sold goods to Akbar for ₹ 60,000. Akbar accepts two bills of ₹ 25,000 for 2 months, and ₹ 35,000 for 3 months.

The first bill was discounted from bank on 3rd January 2017 for ₹ 24,900 and 2nd bill endorsed to Anthony on 15th January 2017.

First bill was met on maturity but second bill got dishonoured and noting charges of ₹ 200 being paid. Amar charged ₹ 300 as Interest and drew another bill for the amount due for further 2 months. This bill was met on maturity.

Pass the necessary Journal Entries in the books of Amar, Akbar and Anthony.

Solution:

Journal books of Amar (Drawer)

Date

Particulars

L.F.

Debit ₹

Credit ₹

2017

January 1

Akbar’s A/c

Dr.

60,000

To Sales A/c

60,000

(Sold goods to Akbar)

January 1

Bills Receivable I A/c

Dr.

25,000

Bills Receivable II A/c

Dr.

35,000

To Amar’s A/c

60,000

(Received bill)

January 3

Bank A/c

Dr.

24,900

Discounting Charges A/c

Dr.

100

To Bills ReceivableI A/c

25,000

(Discounted bill)

January 15

Anthony’s A/c

Dr.

35,000

To Bills Receivable II A/c

35,000

(Bill endorsed)

April 4

Akbar’s A/c

Dr.

35,200

To Anthony’s A/c

35,200

(Bill got dishonoured)

April 4

Akbar’s A/c

Dr.

300

To Interest A/c

300

(Due interest)

April 4

Bill Receivable A/c

Dr.

35,500

To Amar’s A/c

35,500

(New bill received from Akbar)

June 7

Cash A/c

Dr.

35,500

To Bills Receivable A/c

35,500

(New bill met on maturity)

Journal books of Akbar (Drawee)

Date

Particulars

L.F.

Debit

Credit

2017

January 1

Purchases A/c

Dr.

60,000

To Amar’s A/c

60,000

(Purchased goods from Amar)

January 1

Amar’s A/c

Dr.

60,000

To Bills Payable I A/c

Dr.

25,000

To Bills Payable II A/c

35,000

(Bills accepted)

March 4

Bills Payable I A/c

Dr.

25,000

To Cash A/c

25,000

(Made payment for bill I)

April 4

Bills Payable II A/c

Dr.

35,000

Noting Charges A/c

Dr.

200

To Amar’s A/c

35,200

(Dishonoured Bill Payable II)

April 4

Interest A/c

Dr.

300

To Amar’s A/c

300

(Due interest)

April 4

Amar’s A/c

Dr.

35,500

To Bills Payable A/c

35,500

(Accepted new bill)

June 7

Bills Payable A/c

Dr.

35,500

To Cash A/c

35,500

(Bill honoured)

Journal books of Anthony

Date

Particulars

L.F.

Debit ₹

Credit ₹

2017

January 15

Bills Receivable A/c

Dr.

35,000

To Amar’s A/c

35,000

(Bill received from Amar)

April 4

Amar’s A/c

Dr.

35,200

To Bills Receivable A/c

35,000

To Cash A/c

200

(Dishonoured Bill)

Question 42

Manohar drew a bill of exchange on Pushkar, his debtor, for ₹ 20,000 on 1st March 2016 for 3 months. Pushkar accepted the same and returned it to the drawer. Manohar endorsed the bill to Yadu on 1st April 2016 for a debt of equal amount. Yadu discounted it with the bank at 15% p.a. on 1st May 2016. On the due date the bill was dishonoured. (Noting charges amounted to ₹ 100).

Show the journal entries in the books of :

(a) Drawer, (b) Drawee/Acceptor, and (c) Endorsee

Solution:

Journal Books of Manohar

Date

Particulars

L.F.

Debit ₹

Credit ₹

2016

March 1

Bills Receivable A/c

Dr.

20,000

To Pushkar

20,000

(Bill accepted by Pushkar)

April 1

Yadu

Dr.

20,000

To Bills Receivable A/c

20,000

(Endorsed bills in favour of Yadu)

June 4

Pushkar

Dr.

20,100

To Yadu

20,100

(On the due date, bill dishonoured and Yadu paid noting charges)

Books of Pushkar

Journal

Date

Particulars

L.F.

Debit ₹

Credit ₹

2016

March 1

Manohar

Dr.

20,000

To Bills Payable A/c

20,000

(Bill drawn by Manohar, accepted)

June 04

Bills Payable A/c

Dr.

20,000

Noting Charges A/c

Dr.

100

To Manohar

20,100

(On the due date, bill dishonoured and paid noting charges)

Journal Books of Yadu

Date

Particulars

L.F.

Debit ₹

Credit ₹

2016

April 1

Bills Receivable A/c

Dr.

20,000

To Manohar

20,000

(Bills receivable, received from Manohar)

May 1

Bank A/c

Dr.

19,750

Discounting Charges A/c

Dr.

250

To Bills Receivable A/c

20,000

(Bill discounted for 1 month @ 15% p.a.)

June 4

Manohar

Dr.

20,100

To Bank A/c

20,100

(On the due date, bill dishonoured and paid noting charges)

Working Note: Evaluating discounting charges

Discounting charges = ₹20,000 X \(\frac{15}{100}\) X \(\frac{1}{12}\) = ₹ 250

Question 43

On 1st January 2017, Hari drew on Gopal, who is his debtor for ₹ 60,000 three bills of exchange: First for ₹ 15,000 at one month, Second for ₹ 20,000 at two months and third for ₹ 25,000 at three months. Gopal accepted all three bills.

On 5th January 2017, Hari endorsed the first bill to his creditor Satish in full settlement of his account of ₹ 15,200. This bill was duly met on maturity.

On 1st February 2017, the second bill was discounted from the bank @ 12% p.a. This bill was dishonoured on the due date and bank paid ₹ 120 as noting charges. On Gopal’s request, Hari drew a fourth bill on Gopal for 2 months for the amount due plus interest @ 15% p.a.

Third bill was paid under a rebate of 12% p.a. one month before maturity. The fourth bill was sent to the bank for collection on 4th May 2017 and was duly met on maturity.

Pass Journal entries in the books of Hari, Gopal and Satish.

Solution:

Books of Hari

Journal

Date

Particulars

L.F.

Debit ₹

Credit ₹

2017

January 1

Bills Receivable A/c (1)

Dr.

15,000

Bills Receivable A/c (2)

Dr.

20,000

Bills Receivable A/c (3)

Dr.

25,000

To Gopal

60,000

(Bill accepted by Gopal)

January 5

Satish

Dr.

15,200

To Bills Receivable A/c (1)

15,000

To Discount Received A/c

200

(Bill endorsed in favour of Satish)

February 1

Bank A/c

Dr.

19,800

Discounting Charges A/c

Dr.

200

To Bills Receivable A/c (2)

20,000

(Bill discounted for 1 month with the bank @ 12% p.a.)

March 4

Gopal

Dr.

20,120

To Bank A/c

20,120

(On the due date, bill dishonoured and bank paid noting charges)

March 4

Gopal

Dr.

503

To Interest A/c

503

(Due interest to be received)

March 4

Bills Receivable A/c (4)

Dr.

20,623

To Gopal

20,623

(New bill accepted by gopal)

March 4

Cash A/c

Dr.

24,750

Rebate A/c

Dr.

250

To Bills Receivable A/c (3)

25,000

(Bill retired for 1 month @ 12% p.a. rebate)

May 4

Bill Sent for Collection A/c

Dr.

20,623

To Bills Receivable A/c (4)

20,623

(Bill sent to the bank for collection)

May 7

Bank A/c

Dr.

20,623

To Bills for Collection A/c

20,623

(On the due date, bill honoured)

Journal Books of Gopal

Date

Particulars

L.F.

Debit ₹

Credit ₹

2017

January 1

Hari

Dr.

60,000

To Bills Payable A/c (1)

15,000

To Bills Payable A/c (2)

20,000

To Bills Payable A/c (3)

25,000

(Bills drawn by Hari, accepted)

February 4

Bills Payable A/c (1)

Dr.

15,000

To Cash A/c

15,000

(On the due date, bill honoured)

March 4

Bills Payable A/c

Dr.

20,000

Noting Charges A/c

Dr.

120

To Hari

20,120

(On the due date, bill honoured and paid noting charges)

Mar. 04

Interest A/c

Dr.

503

To Hari

503

(Due interest to be paid)

Mar. 04

Hari

Dr.

20,623

To Bills Payable A/c (4)

20,623

(Bill drawn by Hari, accepted)

Mar. 04

Bills Payable A/c (3)

Dr.

25,000

To Cash A/c

24,750

To Rebate A/c

250

(Bill retired @ 12% rebate for 1 month)

May 07

Bills Payable A/c (4)

Dr.

20,623

To Cash A/c

20,623

(On the due date, bill honoured)

Journal Books of Satish

Date

Particulars

L.F.

Debit ₹

Credit ₹

2017

January 5

Bills Receivable A/c

Dr.

15,000

Discount Allowed A/c

Dr.

200

To Hari

15,200

(Bills receivable, received from Hari)

February 4

Cash A/c

Dr.

15,000

To Bills Receivable A/c

15,000

(On the due date, bill honoured)

Working Note1: Evaluating discounting charges

Discounting charges = ₹20,000 X \(\frac{12}{100}\) X \(\frac{1}{12}\) = ₹ 100

Working Note 2: Evaluating amount of rebate

Amount of rebate = ₹25,000 X \(\frac{12}{100}\) X \(\frac{1}{12}\) = ₹ 250

Working Note 3: Evaluating amount of interest

Amount of interest = ₹20,120 X \(\frac{15}{100}\) X \(\frac{2}{12}\) = ₹ 503

Question 44

Harpal sold goods to Sompal for ₹ 12,000. Sompal accepted three bills of exchange, the first for ₹ 5,000 at one month, the second for ₹ 4,000 at two months and the third for ₹ 3,000 at three months. Harpal endorsed the first bill to Rajpal. The first bill was dishonoured. Rajpal paid ₹ 30 as noting charges. Harpal charged ₹ 200 for interest and drew on Sompal a fourth bill for ₹ 5,230. The second bill was also dishonoured, noting charges paid being ₹ 25. Harpal charged ₹ 150 as interest and accepted ₹ 2,175 in cash and drew a fifth bill for ₹ 2,000. The bill was paid on due date. The third and fourth bills were also met.

Pass Journal entries in the books of Harpal and prepare Sompal’s Account in Harpal’s Ledger.

Solution:

Journal Books of Harpal

Date

Particulars

L.F.

Debit ₹

Credit ₹

Sompal

Dr.

12,000

To Sales A/c

12,000

(Sold goods to Sompal)

Bills Receivable A/c (1)

Dr.

5,000

Bills Receivable A/c (2)

Dr.

4,000

Bills Receivable A/c (3)

Dr.

3,000

To Sompal

12,000

(Bill accepted by Sompal)

Rajpal

Dr.

5,000

To Bills Receivable A/c (1)

5,000

(Bill endorsed in favour of Rajpal)

Sompal

Dr.

5,030

To Rajpal

5,030

(On the due date, bill dishonoured and Rajpal paid noting charges)

Sompal

Dr.

200

To Interest A/c

200

(Due interest to be received)

Bills Receivable A/c (4)

Dr.

5,230

To Sompal

5,230

(New bill accepted by Sompal)

Sompal

Dr.

4,025

To Bills Receivable A/c (2)

4,000

To Cash A/c

25

(On the due date, bill dishonoured and paid noting charges)

Sompal

Dr.

150

To Interest A/c

150

(Due interest to be received)

Cash A/c

Dr.

2,175

Bills Receivable A/c (5)

Dr.

2,000

To Sompal

4,175

(Received ₹ 2,175 in cash and ₹ 2,000 new bill accepted by Sompal)

Cash A/c

Dr.

3,000

To Bills Receivable A/c (3)

3,000

(On the due date, bill honoured)

Cash A/c

Dr.

5,230

To Bills Receivable A/c (4)

5,230

(On the due date, bill honoured)

Cash A/c

Dr.

2,000

To Bills Receivable A/c (5)

2,000

(On the due date, bill honoured)

Sompal’s Account

Dr.

Cr.

Date

Particulars

J.F.

Amount

Date

Particulars

J.F.

Amount

Sales A/c

12,000

Bills Receivable A/c (1)

5,000

Rajpal

5,030

Bills Receivable A/c (2)

4,000

Interest A/c

200

Bills Receivable A/c (3)

3,000

Bills Receivable A/c (2)

4,000

Bills Receivable A/c (4)

5,230

Cash A/c

25

Cash A/c

2,175

Interest A/c

150

Bills Receivable A/c (5)

2,000

21,405

21,405

Also Check: DK Goel Solution for Chapter 19 Rectification of Errors
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