Question

Amar sells goods to Bhola for ₹ 10,000 and draws upon him a bill for the amount payable 3 months after date. The bill is accepted by Bhola. Amar discounts the bill with his bankers at a discount of ₹ 150 inclusive of all charges. Bhola fails to meet this bill on maturity. Amar pays off his banker and his expenses amounting to ₹ 100. Bhola gives a fresh bill, 2 months' date to Amar for ₹ 10,250, which he met at maturity.
Show the necessary Journal entries in Amar's books.

Answer 1

Books of Amar
Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	Bhola	Dr.		10,000
	To Sales A/c				10,000
	(Goods were sold to Bhola)
	Bills Receivable A/c	Dr.		10,000
	To Bhola				10,000
	(Bhola’s acceptance was received)
	Bank A/c	Dr.		9,850
	Discount Charges A/c	Dr.		150
	To Bills Receivable A/c				10,000
	(Bhola’s acceptance discounted with bank)
	Bhola	Dr.		10,100
	To Bank A/c				10,100
	(Bhola’s acceptance declared dishonoured)
	Bank A/c	Dr.		10,100
	To Cash A/c				10,100
	(Payment made to bank with noting charges for dishonoring of the bill)
	Bhola	Dr.		150
	To Interest A/c				150
	(Interest due from Bhola for on account of bill dishonor)
	Bills Receivable A/c	Dr.		10,250
	To Bhola				10,250
	(New bill accepted by Bhola for the amount due including rating charges and interest)
	Cash A/c	Dr.		10,250
	To Bills Receivable A/c				10,250
	(Amount received)