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# 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 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.

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Solution

## Books of A Journal Date Particulars L.F. Debit Amount (Rs) Credit Amount (Rs) 2016 Oct. 30 B Dr. 14,000 To Sales A/c 14,000 (Goods sold to B) Oct. 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 14,000 (B accepted bills) Oct. 30 C Dr. 4,000 To Bills Receivable A/c (2) 4,000 (Bill endorsed in favour of C) Dec. 03 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 @ 18 p.a. for 3 months) 2017 Jan. 02 Cash A/c Dr. 2,000 To Bills Receivable A/c (1) 2,000 (Bill honoured on due date) Mar. 03 B Dr. 8,040 To Bank A/c 8,040 (Bill dishonoured on due date and noting charges paid by bank) Mar. 03 Cash A/c Dr. 3,040 To B 3,040 (Cash received from B) Mar. 03 B Dr. 150 To Interest A/c 150 (Interest due to be received) Mar. 03 Bills Receivable A/c Dr. 5,150 To B 5,150 (B accepted the new bill) June 06 Cash A/c Dr. 5,150 To Bills Receivable A/c 5,150 (Bill honoured on due date) Books of B Journal Date Particulars L.F. Debit Amount (Rs) Credit Amount (Rs) 2016 Oct. 30 Purchases A/c Dr. 14,000 To A 14,000 (Goods purchased from A) Oct. 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 Jan. 02 Bills Payable A/c (1) Dr. 2,000 To Cash A/c 2,000 (Bill honoured on due date) Feb. 02 Bills Payable A/c (2) Dr. 4,000 To Cash A/c 4,000 (Bill honoured on due date) Mar. 03 Bills Payable A/c (3) Dr. 8,000 Noting Charges A/c Dr. 40 To A 8,040 (Bill dishonoured on due date and noting charges paid) Mar. 03 A Dr. 3,040 To Cash A/c 3,040 (Cash paid to A) Mar. 03 Interest A/c Dr. 150 To A 150 (Interest due to be paid) Mar. 03 A Dr. 5,150 To Bills Payable A/c 5,150 (Bill drawn by A, accepted) June 06 Bills Payable A/c Dr. 5,150 To Cash A/c 5,150 (Bill honoured on due date) Working Note: Calculation of Discounting Charges $\mathrm{Discounting}\mathrm{Charges}=8,000×\frac{18}{100}×\frac{3}{12}=\mathrm{Rs}360$

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