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 purchase fro Bansal Traders.

Date	Amt.(Rs.)
Dec $21$, $2005$	$1,000$
Dec $26$, $2005$	$1,200$
Dec $18$, $2005$	$2,000$
Dec $31$, $2005$	$5,000$

For all the purchase, Mohan Traders drew promissory note in favour of Bansal Traders payable after $30$ days. The promissory note for the sale of December $21$, $2010$ was retained by Bansal Traders with them till the date of its maturity. The promissory note drawn on $\mathrm{26.12.2010}$ was discounted by Bansal Traders from their bank at $12\%$ per annum. The promissory note drawn on December $28$, $2010$ was endorsed by Bansal Traders in favour of their creditor Dream Soaps in full settlement of a purchase amounting to Rs. $1,900$. On $\mathrm{25.1.2011}$ Bansal Traders sent the promissory note drawn on December $31$, $2010$ 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

In the Books of Bansal Traders
Journal Entries

Date	Particulars	LF	Amt.(Dr)	Amt.(Cr)
$2010$
Dec $21$	Mohan Traders Dr To Sales A/c (Being goods sold to Mohan Traders and allowed $10\%$ trade discount)		$900$	$900$
Dec $21$	Bills Receivable Ist A/c Dr To Mohan Traders (Being acceptance received)		$900$	$900$
Dec $26$	Mohan Traders Dr To Sales (Being goods sold $10\%$ trade discount allowed)		$1,080$	$1,080$
Dec $26$	Bills Receivable A/c Dr To Mohan Traders (Being acceptance received)		$1,080$	$1,080$
Dec $26$	Bank A/c Dr Discount A/c Dr To Bills Receivable A/c (Being bill discounted with the bank at the rate of $12\%$ per annum		$1,071$ $9$	$1,080$
Dec $28$	Mohan Traders Dr To Sales A/c (Being goods sold to Mohan Traders and allowed $10\%$ trade discount)		$1,800$	$1,800$
Dec $28$	Bills Receivable A/c Dr To Mohan Traders (Being acceptance received)		$1,800$	$1,800$
Dec $28$	Dream Soaps A/c Dr To Bills Receivable A/c To Discount A/c (Being acceptance received from Mohan Traders endorsed to dream soaps in full settlement of $1,900$ purchase)		$1,900$	$1,800$ $100$
Dec $31$	Mohan Traders Dr To Sales A/c (Being goods sold to Mohan Traders are allowed $10\%$ trade discount)		$4,500$	$4,500$
Dec $31$	Bills Receivable A/c Dr To Mohan Traders (Being acceptance received)		$4,500$	$4,500$
$2011$
Jan $23$	Cash A/c Dr To Bills Receivable A/c (Being promissory note issued on Dec $21$, $2005$ was met on maturity)		$900$	$900$
Jan $25$	Bill Sent for Collection A/c Dr To Bills Received A/c (Being bill sent to the bank for collection)		$4,500$	$4,500$
Feb $2$	Bank A/c Dr To Bill Sent for Collection A/c (Being bill met on maturity)		$4,500$	$4,500$

Mohan Trader's Account

Date	Particulars	JF	Amt.(Rs.) Dr	Date	Particulars	JF	Amt.(Rs.) Cr.
$2010$
Dec $21$	To Sales A/c		$900$	Dec $21$	By Bills Receivable A/c		$900$
Dec $26$	To Sales A/c		$1,080$	Dec $26$	By Bills Receivable A/c		$1,080$
Dec $28$	To Sales A/c		$1,800$	Dec $28$	By Bills Receivable A/c		$1,800$
Dec $31$	To Sales A/c		$4,500$	Dec $31$	By Bill Receivable A/c		$4,500$
			$8,280$				$8,280$

In the Books of Mohan Traders
Journal Entries

Date	Particulars	LF	Amt.(Dr)	Amt.(Cr)
$2010$
Dec $21$	Purchase A/c Dr To Bansal Traders (Being goods purchased and $10\%$ trade discount received)		$900$	$900$
Dec $21$	Bansal Traders Dr To Bills Payable A/c (Being acceptance given)		$900$	$900$
Dec $26$	Purchase A/c Dr To Bansal Traders (Being goods purchased and $10\%$ trade discount received)		$1,080$	$1,080$
Dec $26$	Bansal Traders Dr To Bills Payable A/c (Being acceptance given)		$1,080$	$1,080$
Dec $28$	Purchase A/c Dr To Bansal Traders (Being goods purchased and $10\%$ trade discount received)		$1,800$	$1,800$
Dec $28$	Bansal Traders Dr To Bills Payable A/c (Being acceptance given)		$1,800$	$1,800$
Dec $31$	Purchase A/c Dr To Bansal Traders (Being goods purchased from Bansal Traders)		$4,500$	$4,500$
Dec $31$	Bansal Traders Dr To Bills Payable A/c (Being acceptance given)		$4,500$	$4,500$
$2011$
Jan $23$	Bills Payable A/c Dr To Cash A/c (Being bills payable paid on maturity)		$900$	$900$
Jan $28$	Bills Payable A/c Dr To Bank A/c (Being bills payable paid on maturity)		$1,080$	$1,080$
Jan $30$	Bills Payable A/c Dr To Cash A/c (Being bills payable paid on maturity)		$1,800$	$1,800$
Feb $2$	Bills Payable A/c Dr To Bank A/c (Being bills payable paid on maturity)		$4,500$	$4,500$

Bansal Trader's Account

Date	Particulars	JF	Amt.(Rs.) Dr	Date	Particulars	JF	Amt.(Rs.) Cr
$2010$				$2010$
Dec $21$	To Bills Payable A/c		$900$	Dec $21$	By Purchase A/c		$900$
Dec $26$	To Bills Payable A/c		$1,080$	Dec $26$	By Purchase A/c		$1,080$
Dec $28$	To Bills Payable A/c		$1,800$	Dec $28$	By Purchase A/c		$1,800$
Dec $31$	To Bill Payable A/c		$4,500$	Dec $31$	By Purchase A/c		$4,500$
			$8,280$				$8,280$