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.

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Solution

In the Books of B

JOURNAL

DateParticularsL.F.Amt. (Dr.)Amt. (Cr.)2016 Apr 1Bills Receivable A/c Dr. 25,000 To A's A/c 25,000(Acceptance received) –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––Apr 4Bank A/c Dr. 23,875Discounting Charges A/c(25,000×18100×312) Dr. 1,125 To Bills Receivable A/c 25,000(Bill discounted from the bank) –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––July 4A's A/c Dr. 25,250 To Bank A/c (25,000 + 250) 25,250(Bill dishonoured and noting charges paid by bank) –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––July 4Cash A/c Dr. 5,250 To A's A/c 5,250(Amount received from A ) –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––July 4A's A/c Dr. 400 To Interest A/c(20,000×12100×212) 400(Interest receivable from Rajesh) –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––July 4Bills Receivable A/c (20,000 + 400) Dr. 20,400 To A's A/c 20400(New acceptance received) –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––Sep 7Bank A/c Dr. 20,400 To Bills Receivable A/c 20,400(Amount of the bill received on due date)

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