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

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