Journal for Discounting

Q. Journalise the following transactions, post them into Ledger, balance the accounts and prepare a Trial Balance :−

2017		(₹)
March 1	Shyam Sunder & Sons commenced business with cash	80, 000
2	Purchased goods for cash	36, 000
3	Machinery purchased for cash	4, 000
4	Purchased goods from :
	Raghu	22, 000
	Dilip	30, 000
6	Returned goods to Raghu	4, 000
8	Paid to Raghu, in full settlement of his account	17, 500
10	Sold goods to Mahesh Chand & Co. for ₹ 32, 000 at 5% trade discount
13	Received cash from Mahesh Chand & Co.	19, 800
	Discount allowed	200
15	Paid cash to Dilip	14, 850
	Discount received	150
20	Sold goods for cash	25, 000
24	Sold goods for cash to Sudhir Ltd.	18, 000
25	Paid for Rent	1, 500
26	Received for Commission	2, 000
28	Withdrew by Proprietor for his personal use	5, 000
28	Purchased a fan for Proprietor's house	1, 200

Q.

What Are the Three Parties to the Bill of Exchange?

Q.

What Is Endorsement of Bill of Exchange?

Q.

Suresh started business on 1st April, 2015 with a capital of Rs. 30, 000. The following trial balance was drawn up form his books at the end of the year.

$\begin{array}{cccc}\text{Name of Accounts}& \text{Amt. (Rs.)}& \text{Name of Accounts}& \text{Amt. (Rs.)}\\ \text{Drawings}& 4,500& \text{Capital}& 40,000\\ \text{Plant and Fixtures}& 8,000& \text{Sales}& 1,60,000\\ \text{Purchases}& 1,16,000& \text{Creditors}& 12,000\\ \text{Carriage Inwards}& 2,000& \text{Bills Payable}& 9,000\\ \text{Wages}& 8,000& & \\ \text{Return Inwards}& 4,000& & \\ \text{Salaries}& 10,000& & \\ \text{Printing}& 800& & \\ \text{Advertisement}& 1,200& & \\ \text{Trade Charges}& 600& & \\ \text{Rent}& 1,400& & \\ \text{Debtors}& 25,000& & \\ \text{Bills Reveivable}& 5,000& & \\ \text{Investments}& 15,000& & \\ \text{Discount}& 500& & \\ \text{Cash at Bank}& 16,000& & \\ \text{Cash in Hand}& 3,000& & \\ & \overline{\underset{–}{\underset{–}{2,21,000}}}& & \overline{\underset{–}{\underset{–}{2,21,000}}}\\ & & & \end{array}$

The value of stock as at 31st March, 2016 was Rs. 26, 000.

You are required to prepare his trading and profit and loss account for the year ended 31st March, 2016 and a balance sheet as on the date after taking the following facts into account.

(i) Interest on capital is to be provided at 6% per annum.

(ii) An additional capital of Rs. 10, 000 was introduced by Suresh on 1st October, 2016.

(iii) Plant and fixtures are to be depreciated by 10% per annum.

(iv) Salaries outstanding on 31st March, 2016 amounted to Rs. 500.

(v) Accrued interest on investment amounted to Rs. 750.

(vi) Rs. 500 are bad debts and provision for doubtful debts is to be created at 5% on the balance of debtors.

Q.

Journalise the following transactions in the books of Shrinath Apte.
(i) Opened bank account with PNB Rs. 10, 000.
(ii) Cash sent to bank Rs. 50, 000.
(iii) Bought shares in 'Birla Ltd' for Rs. 5000 and brokerage paid @ 2%. The Payment is made by cheque.
(iv) A received cheque for Rs. 1, 56, 000 from John in full settlement of his account of Rs. 1, 60, 000.
(v) Paid Rs. 1, 78, 000 to Smith in full settlement of Rs. 1, 80, 000 Due to him by cheque.
(vi) A cheque from a customer amounted to Rs. 5, 000 deposited in the bank was returned dishonoured.
(vii) Bought furniture for office use by cheque for Rs. 18, 000.
(viii) Sold goods to Kaushal of the list price of Rs. 12, 500 less 20% trade discount and 2%cash discount and paid 40%by cheque.
(ix) Sold goods to Kaushal of the list price of Rs. 1, 25, 000 less 20% trade discount and received data cheque under a cash discount of 2%

Q.

What is the formula for the cash discount?

Q.

Discounting Charges =

1. None of these

2. Amount of Bill Discounted $\times$ Rate +Unexpired Period

3. Amount of Bill Discounted +Rate $\times$ Unexpired Period

4. Amount of Bill Discounted $\times$ Rate $\times$ Unexpired Period

Q. Give the rectifying entries of the following:
(i) Sales of ₹ 20, 000 to Manoj were recorded as ₹ 2, 000 in the Sales Book.
(ii) An amount of ₹ 25, 000 spent for the extension of machinery has been debited to the Wages Account.
(iii) Discount received from Ram & Co. ₹ 350, has not been entered in the discount column of the Cash Book.
(iv) Goods of ₹ 3, 000 sold to Mahesh were recorded in the Purchases Book.

Q.

Is Cheque a Bill of Exchange?

Q.

Name the parties to a promissory note.

Q.

Ram gets Mohan’s acceptance for Rs. 12, 000 discounted at 2 months at 12 % p.a. The amount of discount will be :

1. Rs. 80

2. Rs. 40

3. Rs. 240

4. Rs. 120

Q.

From the details given below, find out the credit sales and total sales.

$\begin{array}{cc}& (Rs.)\\ \text{Opening Debtors}& 45,000\\ \text{Closing Debtors}& 56,000\\ \text{Discount allowed}& 2,500\\ \text{Sales returns}& 8,500\\ \text{Irrecoverable Amount}& 4,000\\ \text{Bills receivables received}& 12,000\\ \text{Bills receivables dishonoured}& 3,000\\ \text{Cheque dishonoured}& 7,700\\ \text{Cash Sales}& 80,000\\ \text{Cash received from Debtors}& 2,30,000\\ \text{Cheque received from Debtors}& 25,000\end{array}$

Q.

Find out the credit purchase from the following:

$\begin{array}{cc}\text{Items}& \text{Amt. (Rs.)}\\ \text{Balance of creditors April 1, 2004}& 45,000\\ \text{Balance of creditors March 31, 2005}& 36,000\\ \text{Cash paid to creditors}& 1,80,000\\ \text{Cheque issued to crediotors}& 60,000\\ \text{Cash purchases}& 75,000\\ \text{Discount received from creditors}& 5,400\\ \text{Discount allowed}& 5,000\\ \text{Bills payable given to creditors}& 12,750\\ \text{Return outwards}& 7,500\\ \text{Bills payable dishonoured}& 3,000\\ \text{Bills receivable endorsed to creditors}& 4,500\\ \text{Bills receivable endorsed to creditors dishonoured}& 1,800\\ \text{Return inwards}& 3,700\end{array}$

Q.

Basu accepted a bill drawn by Nandu amounted to Rs.4, 000 and payable after four months. Nandu discounted it with banker @ 18% per annum. On the due date, bill was dishonored. Bank paid Rs.40 as noting charges.After on month Basu paid the amount due to Nandu. Pass Journal entries in the books of Nandu only.

Q.

Why Is a Bill of Exchange Unconditional?

Q.

What adjusting entries would you record for the following

(a) Depreciation

(b) Discount on debtors

(c) Interest on capital

(d) Manager's commission

Q.

On discounting of a bill of exchange with the bank, the amount of discount is borne by:

1. Drawer

2. Drawee

3. Payee

4. Bank

Q.

Arun sold goods to Bala for Rs. 16, 000 and drew a bill on Bala for three months who duly accepted the same. Arun endorsed the bill to Charan. Charan endorsed it to his creditor Dharam. Dharam discounted the bill at 15% per annum. On the date of maturity, the bill was dishonoured and bank paid noting charges amounting Rs. 100.

Show the necessary journal entries in the books of Dharam.

Q.

A bill of Rs. 12, 500 drawn by Shyam is accepted by Ram. Shyam gets its discounted @ 12% p.a. due 3 months hence, the discounting charges borne by Shyam is :

1. Rs. 375

2. Rs. 250

3. Rs. 1, 000

4. Rs. 1, 500

Q.

On March 15, 2010 Ramesh sold goods for Rs. 8, 000 to Deepak on credit. Deepak accepted a bill of exchange drawn upon him by Ramesh payable after three months. On April, 15 Ramesh endorsed the bill in favour of his creditor Poonam in full settlement of her debt of Rs. 8, 250. On May 15, Poonam discounted the bill with her bank @ 12% p.a. On the due date Deepak met the bill. Record the necessary journal entries in the books of Ramesh.

Q.

What Is Bill of Exchange and How Does It Differ From Cheque?

Q.

A sold goods to B for Rs. 20, 000. A will grant 5 % discount to B. B requested A to draw a bill. The amount of bill will be :

1. Rs 20, 000

2. Rs 19, 000

3. Rs 19, 200

4. Rs 20, 200

Q.

On January 1, 2011, Arun sold goods for Rs. 30, 000 to Sunil. 50% of the payment was made immediately by Sunil on which Arun allowed a cash discount of 2%. For the balance, Sunil drew a bill in favour of Arun payable after 20 days. Since, the date of maturity of bill was a public holiday, Arun presented the bill on a day, as per the provisions of Negotiable Instrument Act which was met by Sunil.

State the date on which the bill was presented by Arun for payment and Journalise the above transactions in the books of Arun and Sunil.

Q.

On 1st January 2006, Vimal sold goods worth Rs. 20, 000 to Renu and drew a bill on Renu for 3 months. Renu accepted the bill and returned it to Vimal who discounted the bill with the bank on 4th February 2006 @ 15% p.a. The discounting charges will be:

1. Rs 750

2. Rs 500

3. None of the above

4. Rs 3000

Q.

On comparing the cash book with passbook of Naman, it is found that on 31st March 2016, the bank balance of Rs. 40, 960 showed by the cash book differs from the bank balance with regard to the following:

(i) Bank charges Rs. 100 on 31st March 2016, are not entered in the cash book.

(ii) On 21st March 2016, a debtor paid Rs. 2, 000 into Naman's bank account in settlement of his dues, but no entry was made in the cash book in respect of this.

(iii) Cheques totaling Rs. 12, 980 were issued by Naman and duly recorded in the cash book before 31st March 2016 but had not been presented at the bank for payment up to that date.

(iv) A bill for Rs. 6, 900 discounted with the bank is entered in the cash book without recording the discount charges of Rs. 800.

(v) Rs. 3, 520 is entered in the cash book as paid into the bank on 31st March 2016 but not credited by the bank until the following day.

(vi) No entry has been made in the cash book to record the dishonour on 15th March, 2016 of a cheque for Rs. 650 received from Bhanu.

Prepare a reconciliation statement as on 31st March, 2016.

Q.

Enter the following transactions in a cash book with cash and bank column for the month July, 2011:

2011 July
1.	Cash in hand Rs 23, 000, Bank balance Rs 14, 000.
2.	Cash sales Rs 8, 500 at 10% trade discount.
4	Purchased goods for cash Rs 10, 000 at 10% trade discount and 5% cash discount. Half the amount was paid in cash remaining by cheque.
7.	Deposited into bank Rs 8, 000.
9.	Received on account a bearer cheque from Sameer for Rs 9, 550 and discount allowed to them Rs 25.
12.	Sold goods for cash Rs 8, 000 at 4% trade discount.
15.	Paid Life Insurance Premium Rs 3, 225.
18.	Cheque received on 9 July 2011 deposited into the bank.
20.	Withdrew from bank for office use Rs 7, 000.
22.	Received a crossed cheque from Prabhu for Rs 4, 670 in full settlement of his account Rs 4, 700.
27.	Introduced additional capital Rs 15, 000 and deposited the same into the bank.
28	Received a cheque for dividend Rs 6, 245.
29.	Paid electricity bill Rs 2, 000 and telephone bill Rs 4, 100.

Q.

Distinguish between cash discount and trade discount.

Q.

Enter the following transactions in a cash book with cash and bank and columns for the month of April, 2011:

2011 Apr.
1.	Started business with cash Rs 30, 000.
2.	Opened a current account with bank and deposited Rs 9, 000.
5.	Received Rs 4850 for cash sales and discount allowed Rs 50.
6.	Purchased goods of Rs 3, 000 at 10% cash discount, half the amount was paid by cash and remaining by cheque.
9.	Received a crossed cheque for Rs 7, 775 from Megha Associates and discount allowed Rs 25.
12.	Purchased machinery of Rs 13, 300 and paid for installation Rs 700.
15.	Received a bearer cheque of Rs 737 from Rahul in settlement of his account Rs 800.
17.	Deposited into the bank Rs 2, 000.
20.	Transferred Rs 8, 000 from proprietor’s savings account to Current account.
22.	Received a bearer cheque from Vinod Rs 2, 230.
24.	Deposited the cheque received from Vinod into the bank.
27.	Bank informed that cheque received from Vinod is dishonoured.
28.	Paid for printing bill book Rs 660.
30.	Withdrew from bank for office use Rs 1, 000.

Q.

Journalise the following transactions in the books of Mantri.

2011 June	1	Commenced business with Cash Rs 1, 20, 000, Goods Rs. 60, 000 and Furniture Rs 65, 000.
	3	Opened a current account in Bank of Baroda by depositing Rs 75, 000.
	5	Cash purchases Rs 35, 000.
	9	Cash Sales Rs 55, 000.
	10	Purchased goods worth Rs 20, 000 from Amit & Co. subject trade discount of 2%
	14	Credit sales to Kalpana Rs 15, 000.
	16	Paid cash to Amit & Co. Rs 9, 500 who allowed us discount Rs 100.
	19	Goods distributed as free samples of Rs 1, 500.
	21	Received Cash from Kalpana Rs 4, 800 on account and allowed her cash discount Rs 200.
	24	Returned goods of Rs 750 to Amit & Co.
	26	Purchased shares of Rs 15, 000 of HDFC Bank.
	29	Received goods returned by Kalpana Rs 200.
	30	Rent paid by cheque Rs 7, 000.

Q.

Journalise the following transactions in the books of Mr. Bipin.

2011 July	1	Started business with Cash Rs 3, 25, 000 Goods worth Rs 50, 000 and Laptop Rs 45, 000.
	3	Deposited in Dena Bank Rs 1, 50, 000.
	7	Bought goods on credit from Manish Rs 10, 000 at 10% Trade discount.
	11	Sold goods to Nitin of Rs 12, 000 at 5% Trade Discount.
	13	Goods worth Rs 900 burnt by fire.
	17	Received cash of Rs 11, 200 from Nitin in full settlement of his account.
	20	Drew from bank Rs 4, 000 for his personal purpose.
	23	Paid cash Rs 9, 300 to Manish in full settlement of his account.
	25	Paid house rent Rs 2, 500.
	28	Sold goods worth Rs 12, 000 to Dinesh who paid us Rs 8, 000 on account.
	31	Wages paid Rs 6, 000.