Question

(Endorsement, discounted with bank, dishonoured) On 1st July, 2016, Ashu draws on Vishu who owed him Rs. 25,000, two bills, one for Rs 15,000 for three months and another for Rs. 10,000 for two months. Vishu accepts these bills.

Ashu endorses on 3rd July the first bill to his creditor Krish in full settlement of his account of Rs. 15,500 and discounts the second bill on 4th July with his banker @ 12% per annum. The first bill is duly paid at maturity but the second bill is dishonoured and Rs. 150 are paid as noting charges. On 5th September, Ashu draws and Vishu accepts a third bill for three months for Rs. 10,450 in lieu of the dishonoured bill. This bill is duly paid at maturity.

Give journal entries to record these transactions in the books of Ashu and Vishu.

Answer 1

In the Books of Dharam
JOURNAL

$\begin{array}{ccccc}\text{Date}& \text{Particulars}& \text{LF}& \text{Amt(Dr)}& \text{Amt(Cr)}\\ \text{2016}& & & & \\ \text{July 1}& \text{Bills Receivable A/c (No. I)}\text{Dr}& & \text{15,000}& \\ & \text{Bills Receivable A/c (No. II)}\text{Dr}& & \text{10,000}& \\ & \text{To Vishu}& & & \text{25,000}\\ & \underset{–}{\text{(Being two acceptances received from Vishu)}}& & & \\ \text{July 3}& \text{Krish}\text{Dr}& & \text{15,500}& \\ & \text{To Bills Receivable A/c (No. I)}& & & \text{15,000}\\ & \text{To Discount Received A/c}& & & \text{500}\\ & \text{(Being first endorsed to krish in full settlement}& & & \\ & \underset{–}{\text{of his account of Rs. 15,500)}}& & & \\ \text{July 4}& \text{Bank A/c}\text{Dr}& & \text{9,800}& \\ & \text{Discounting Charges A/c}[10,000\times \frac{12}{100}\times \frac{2}{12}]\text{Dr}& & \text{200}& \\ & \text{To Bills Receivable A/c (No. II)}& & & \text{10,000}\\ & \underset{–}{\text{(Being second bill discounted at 12 \% per annum )}}& & & \\ \text{Sep 4}& \text{Vishu}\text{Dr}& & \text{10,150}& \\ & \text{To Bank (10,000 + 150)}& & & \text{10,150}\\ & \text{(Being second bill dishonoured and noting charges}& & & \\ & \underset{–}{\text{paid by the bank}}& & & \\ \text{Sep 5}& \text{Vishu}\text{Dr}& & \text{300}& \\ & \text{To Interest A/c}& & & \text{300}\\ & \text{(Being interest receivable being}& & & \\ & \underset{–}{\text{10,450 - 10,150 = Rs. 300)}}& & & \\ \text{Sep 5}& \text{Bills Receivable A/c (No. III)}\text{Dr}& & \text{10,450}& \\ & \text{To Vishu}& & & \text{10,450}\\ & \text{(Being new acceptance received}& & & \\ & \text{including Rs. 150 as noting charges}& & & \\ & \underset{–}{\text{and Rs. 300 as interest)}}& & & \\ \text{Dec 8}& \text{Bank A/c}\text{Dr}& & \text{10,450}& \\ & \text{To Bills Receivable A/c (No. III)}& & & \text{10,450}\\ & \text{(Being the amount of the bill received}& & & \end{array}$

$\begin{array}{ccccc}\text{Date}& \text{Particulars}& \text{LF}& \text{Amt(Dr)}& \text{Amt(Cr)}\\ \text{2016}& & & & \\ \text{July 1}& \text{Ashu}\text{Dr}& & \text{25,000}& \\ & \text{To Bills Payable A/c (No. I)}& & & \text{15,000}\\ & \text{To Bills Payable A/c (No. II)}& & & \text{10,000}\\ & \underset{–}{\text{(Being the two acceptance given to Ashu)}}& & & \\ \text{Sep 4}& \text{Bills Payable A/c (No. II)}\text{Dr}& & \text{10,000}& \\ & \text{Noting Charges A/c}\text{Dr}& & \text{150}& \\ & \text{To Ashu}& & & \text{10,150}\\ & \text{(Being the second bill dishonoured and}& & & \\ & \underset{–}{\text{noting charges payable}}& & & \\ \text{Sep 5}& \text{Interest A/c}\text{Dr}& & \text{300}& \\ & \text{To Ashu}& & & \text{300}\\ & \text{(Being interest payable being 10,450 -}& & & \\ & \underset{–}{\text{10,150 = Rs. 300)}}& & & \\ \text{Sep 5}& \text{Ashu}\text{Dr}& & \text{10,450}& \\ & \text{To Bills Payable A/c (No. II)}& & & \text{10,450}\\ & \underset{–}{\text{(Being the new acceptance given)}}& & & \\ \text{Oct 4}& \text{Bills Payable A/c (No. I)}\text{Dr}& & \text{15,000}& \\ & \text{To Bank A/c}& & & \text{15,000}\\ & \text{(Being the amount of first bill paid}& & & \\ & \underset{–}{\text{on due date)}}& & & \\ \text{Dec 8}& \text{Bills Payable A/c (No.III)}\text{Dr}& & \text{10,450}& \\ & \text{To Bank A/c}& & & \text{10,450}\\ & \text{(Being the amount of third bill paid on}& & & \\ & \text{due date)}& & & \end{array}$