Question

Aashirwad draws on Aakarshak a bill of exchange for 3 months for 10,000 which Aakarshak accept on January 01, 2011. Aashirwad endorses the bill in favour of Aakriti before maturity. Aakkarshak approaches Aashirwad with the request that the bill is renewed for a further period of 3 months @ 18% p.a. interest. Aashirwad pays the sum to Aakriti on the due date and agrees to the proposal of Aakarshak. Record-Journal Entries in the books of Aashirwad assuming that the second bill is duly met.

Answer 1

Journal Entries
In the books of Aashirwad

$\begin{array}{ccccc}\text{Date}& \text{Particulars}& \text{L.F.}& \text{Amount Dr.(')}& \text{Amount Cr.(Rs)}\\ 2011& & & & \\ \text{Jan.1}& \text{Bills Receivable A/c}\text{Dr}& & 10,000& \\ & \text{To Aakarshak}& & & 10,000\\ & \underset{–}{\text{(Being acceptance received from Aakarshak)}}& & & \\ & \text{Aakriti}\text{Dr}& & 10,000& \\ & \text{To Bills Receivable A/c}& & & 10,000\\ & \underset{–}{\text{(Being bill endorsed to Aakriti)}}& & & \\ \text{Apr.4}& \text{Aakarshak}\text{Dr}& & 10,000& \\ & \text{To Aakriti}& & & 10,000\\ & \text{(Being bill of Aakarshak cancelled on his}& & & \\ & \underset{–}{\text{request for renewal)}}& & & \\ & \text{Aakriti}\text{Dr}& & 10,000& \\ & \text{To Cash A/c}& & & 10,000\\ & \underset{–}{\text{(Being payment of bill made of Aakriti)}}& & & \\ & \text{Aakarshak}\text{Dr}& & 450& \\ & \text{To Interest A/c}& & & 450\\ & \underset{–}{\text{(Being interest shown due for renewal)}}& & & \\ & \text{Bills Receivable A/c}\text{Dr}& & 10,450& \\ & \text{To Aakarshak}& & & 10,450\\ & \underset{–}{\text{(Being bill received from Aakarshak)}}& & & \\ \text{July 7}& \text{Cash A/c}\text{Dr}& & 10,450& \\ & \text{To Bills Receivable A/c}& & & 10,450\\ & \text{(Being cash received against bill)}& & & \end{array}$