Question

'B' being unable to meet his acceptance for ₹ 2,000 due on 15th June, approaches the Drawer 'A' (who is in possession of the bill) on 30th June, with the request to receive ₹ 800 in cash and draw on him for the balance plus ₹ 15 for interest at 3 months date and cancel the old bill for ₹ 2,000. 'A' agrees to this. Pass the entries in the books of 'A' and 'B'.

Answer 1

Books of A
Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
Jun.15	B	Dr.		2,000
	To Bills Receivable A/c				2,000
	(B’s acceptance dishonoured)
Jun.30	Cash A/c	Dr.		800
	To B				800
	(Cash received from B)
Jun.30	B	Dr.		15
	To Interest A/c				15
	(Interest due from B)
Jun.30	Bills Receivable A/c	Dr.		1,215
	To B				1,215
	(Now bill accepted by B together with Interest)

Books of B
Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
Jun.15	Bills Payable A/c	Dr.		2,000
	To A				2,000
	(Bill drawn by A was dishonoured)
Jun. 30	A	Dr.		800
	To Cash A/c				800
	(Cash paid to A)
Jun. 30	Interest A/c	Dr.		15
	To A				15
	(Interest due to A)
Jun.30	A	Dr.		1,215
	To Bills Payable A/c				1,215
	(Bill drawn by A for balance amount with interest was accepted)