Question

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.

Answer 1

Books of A Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
2017
Jan. 01	B	Dr.		30,000
	To Sales A/c				30,000
	(Goods sold to B)
Jan. 01	Bills Receivable A/c	Dr.		30,000
	To B				30,000
	(B accepted the bill)
Feb. 04	Bank A/c	Dr.		29,100
	Discounting Charges A/c	Dr.		900
	To Bills Receivable A/c				30,000
	(Bill discounted with the bank @ 18% p.a. for 2 months)
Apr. 04	B	Dr.		30,200
	To Bank A/c				30,200
	(Bill dishonoured on due date and noting charges paid)
Apr. 04	B	Dr.		604
	To Interest A/c				604
	(Interest due to be received)
Apr. 04	Bills Receivable A/c	Dr.		30,804
	To B				30,804
	(B accepted the new bill)
June 07	Cash A/c	Dr.		30,804
	To Bills Receivable A/c				30,804
	(Bill honoured on due date)

Books of B Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
2017
Jan. 01	Purchases A/c	Dr.		30,000
	To A				30,000
	(Goods purchased from A)
Jan. 01	A	Dr.		30,000
	To Bills Payable A/c				30,000
	(Bill drawn by A, accepted)
Apr. 04	Bills Payable A/c	Dr.		30,000
	Noting Charges A/c	Dr.		200
	To A				30,200
	(Bill dishonoured on due date and noting charges paid)
Apr. 04	Interest A/c	Dr.		604
	To A				604
	(Interest due to be paid)
Apr. 04	A	Dr.		30,804
	To Bills Payable A/c				30,804
	(New bill drawn by A, accepted)
June 07	Bills Payable A/c	Dr.		30,804
	To Cash A/c				30,804
	(Bill honoured on due date)

Working Note:

WN1 Calculation of Discounting Charges

$\mathrm{Discounting}\mathrm{Charges}=30,000\times \frac{18}{100}\times \frac{2}{12}=\mathrm{Rs}900$

WN2 Calculation of amount of Interest

$\mathrm{Amount}\mathrm{of}\mathrm{Interest}=30,200\times \frac{12}{100}\times \frac{2}{12}=\mathrm{Rs}604$