Question

A owed to B Rs. 25,000 on 1st April, 2016. On the same date, B drew a bill of the same amount at 3 months on A. The bill was accepted by A. B discounted the bill with his bank on 4th April, 2016 @ 18 % per annum. On the due date, the bill was dishonoured and noting charges Rs. 250 were paid by the bank. A agreed to pay Rs. 5,250 and accepted another bill for the remaining amount for 2 months together with interest @ 12 % per annum. On the due date, the bill was duly met. Give the journal entries in the books of B.

Answer 1

In the Books of B

JOURNAL

$\begin{array}{ccccc}\text{Date}& \text{Particulars}& \text{L.F.}& \text{Amt. (Dr.)}& \text{Amt. (Cr.)}\\ \text{2016}& & & & \\ \text{Apr 1}& \text{Bills Receivable A/c}\text{Dr.}& & \text{25,000}& \\ & \text{To A's A/c}& & & \text{25,000}\\ & \text{(Acceptance received)}& & & \\ & \underset{–}{}& & & \\ \text{Apr 4}& \text{Bank A/c}\text{Dr.}& & \text{23,875}& \\ & \text{Discounting Charges A/c}(25,000\times \frac{18}{100}\times \frac{3}{12})\text{Dr.}& & \text{1,125}& \\ & \text{To Bills Receivable A/c}& & & \text{25,000}\\ & \text{(Bill discounted from the bank)}& & & \\ & \underset{–}{}& & & \\ \text{July 4}& \text{A's A/c}\text{Dr.}& & \text{25,250}& \\ & \text{To Bank A/c (25,000 + 250)}& & & \text{25,250}\\ & \text{(Bill dishonoured and noting charges paid by bank)}& & & \\ & \underset{–}{}& & & \\ \text{July 4}& \text{Cash A/c}\text{Dr.}& & \text{5,250}& \\ & \text{To A's A/c}& & & \text{5,250}\\ & \text{(Amount received from A )}& & & \\ & \underset{–}{}& & & \\ \text{July 4}& \text{A's A/c}\text{Dr.}& & \text{400}& \\ & \text{To Interest A/c}(20,000\times \frac{12}{100}\times \frac{2}{12})& & & \text{400}\\ & \text{(Interest receivable from Rajesh)}& & & \\ & \underset{–}{}& & & \\ \text{July 4}& \text{Bills Receivable A/c (20,000 + 400)}\text{Dr.}& & 20,400& \\ & \text{To A's A/c}& & & 20400\\ & \text{(New acceptance received)}& & & \\ & \underset{–}{}& & & \\ \text{Sep 7}& \text{Bank A/c}\text{Dr.}& & 20,400& \\ & \text{To Bills Receivable A/c}& & & 20,400\\ & \text{(Amount of the bill received on due date)}& & & \end{array}$