Question

Bansal Traders allow a trade discount of 10% on the list price of the goods purchased from them. Mohan traders, who runs a retail shop made the following purchases from Bansal Traders.

Date	Amount Rs
Dec.21, 2016	1,000
Dec.26, 2016	1,200
Dec.18, 2016	2,000
Dec.31, 2016	5,000

For all the purchases Mohan Traders drew promissory note in favour of Bansal Traders payable after 30 days. The promissory note for the sale of Dec. 21, 2016 was retained by Bansal Traders with them till the date of its maturity. The promissory note drawn on 26.12.2016 was discounted by Bansal Traders from their bank at 12% p.a. The promissory note drawn on Dec. 28, 2016 was endorsed by Bansal Traders in favour of their creditor Dream Soaps in full settlement of a purchase amounting to Rs 1,900. On 25.1.2017 Bansal Traders sent the promissory note drawn on Dec. 31, 2016 to their bank for collection. All the promissory notes were met by Mohan Traders. Record the necessary journal entries for the above transactions in the books of Bansal Traders and Mohan Traders and prepare Mohan Traders account in the books of Bansal Traders and Bansal Traders account in the books of Mohan Traders.

Answer 1

Journal Entries in the Books of Bansal Traders
Date		Particulars			L.F.	Debit Amount Rs	Credit Amount Rs
2016
Dec.21	Mohan Traders			Dr.		900
			To Sales A/c				900
	(Goods sold to Mohan Traders list price Rs 1,000 at 10% trade discount)
2016
Dec.21	Bills Receivable A/c			Dr.		900
			To Mohan Traders				900
	(Promissory note received from Mohan Traders payable after 30 days)
2016
Dec.26	Mohan Traders			Dr.		1,080
			To Sales A/c				1,080
	(Goods sold to Mohan Traders list price Rs 1,200 at 10% trade discount)
2016
Dec.26	Bills Receivable A/c			Dr.		1,080
			To Mohan Traders				1,080
	(Promissory note received from Mohan Traders)
2016
Dec.26	Bank A/c			Dr.		1,071
	Discount A/c			Dr.		9
			To Bills Receivable A/c				1,080
	(Promissory note discounted from the Bank)
2016
Dec.28	Mohan Traders A/c			Dr.		1,800
			To Sales A/c				1,800
	(Goods sold to Mohan Traders list price Rs 2,000 at 10% trade discount)
2016
Dec.28	Bills Receivable A/c			Dr.		1,800
			To Mohan Traders A/c				1,800
	(Promissory note received from Mohan Traders)
2016
Dec.28	Dream Soaps A/c			Dr.		1,900
			To Bills Receivable A/c				1,800
			To Discount Received A/c				100
	(Promissory note of Rs 1,800 sent to Dream Soap in full settlement of amount due to him)
2016
Dec.31	Mohan Traders			Dr.		4,500
			To Sales A/c				4,500
	(Goods sold to Mohan trades list price Rs 5,000 at 10% trade discount)
2016
Dec.31	Bills Receivable A/c			Dr.		4,500
			To Mohan Traders				4,500
	(Promissory note received from Mohan Traders for 30 days)
2017
Jan.23	Cash A/c			Dr.		900
			To Bills Receivable A/c				900
	(Promissory note issued on Dec. 21, 2005 was met on maturity)
2017
Jan.25	Bill Sent for collection A/c			Dr.		4,500
			To Bills Receivable A/c				4,500
	(Promissory note issued on Dec. 31, 2005 sent for collection to bank)
2017
Feb.02	Bank A/c			Dr.		4,500
			To Bill Sent for Collection A/c				4,500
	(Bank got payment of bill sent for collection on due date)

In the books of Bansal Traders Mohan Trader's Account
Dr.							Cr.
Date	Particulars	J.F.	Amount Rs	Date	Particulars	J.F.		Amount Rs
2016				2016
Dec.21	Sales		900	Dec.21	Bills Receivable			900
Dec.26	Sales		1,080	Dec.26	Bills Receivable			1,080
Dec.28	Sales		1,800	Dec.28	Bills Receivable			1,800
Dec.31	Sales		4,500	Dec.31	Bills Receivable			4,500
			8,280					8,280

Journal Entries in the Books of Mohan Trader’s
Date			Particulars						L.F.	Debit Amount Rs	Credit Amount Rs
2016
Dec.21	Purchases A/c					Dr.				900
		To Bansal Traders									900
	(Goods bought from Bansal Trader's list price Rs 1,000 at 10% trade discount)
2016
Dec.21	Bansal Trader					Dr.				900
		To Bills Payable A/c									900
	(Promissory note issued Bansal Traders for Rs 900)
2016
Dec.26	Purchases A/c					Dr.				1,080
		To Bansal Traders									1,080
	(Goods bought from Bansal Traders list price Rs 1,200 at 10% Trade discount)
2016
Dec.26	Bansal Traders					Dr.				1,080
		To Bills Payable A/c									1,080
	(Promissory note received from Bansal Traders)
2016
Dec.28	Purchases A/c					Dr.				1,800
		To Bansal Traders									1,800
	(Goods bought from Bansal Traders list price Rs 2,000 at 10% trade discount)
2016
Dec.28	Bansal Traders					Dr.				1,800
		To Bills Payable A/c									1,800
	(Promissory note issued to Bansal Traders)
2016
Dec.31	Purchases A/c					Dr.				4,500
		To Bansal Traders									4,500
	(Goods bought from Bansal Traders of list price Rs 5,000 at 10% trade discount)
2016
Dec.31	Bansal Traders					Dr.				4,500
		To Bills Payable A/c									4,500
	(Promissory note issued to Bansal Traders)
2017
Jan.23	Bills Payable A/c					Dr.				900
		To Cash A/c									900
	(The first promissory note discharged on its due date)
2017
Jan.28	Bills Payable A/c					Dr.				1,080
		To Bank A/c									1,080
	(The second promissory note discharged on its due date)
2017
Jan.30	Bills Payable A/c					Dr.				1,800
		To Cash A/c									1,800
	(The third promissory discharged by paying Rs 1,800 to Dream Soaps)
2017
Feb.02	Bills Payable A/c							Dr.		4,500
		To Bank A/c									4,500
	(The fourth promissory note discharged by paid Rs 4,500 to Bank)

In the books of Mohan Traders BansalTrader's Account
Dr.							Cr.
Date	Particulars	J.F.	Amount Rs	Date	Particulars	J.F.	Amount Rs
2016				2016
Dec.21	Bills Payable		900	Dec.21	Purchases		900
Dec.26	Bills Payable		1,080	Dec.26	Purchases		1,080
Dec.28	Bills Payable		1,800	Dec.28	Purchases		1,800
Dec.31	Bills Payable		4,500	Dec.31	Purchases		4,500
			8,280				8,280