Question

Give the Journal entries for the following:
(a) B's acceptance to us for ₹ 1,000 due this day, renewed at his request for 3 months with interest @ 6% p.a.
(b) Our bill to Chandra for ₹ 5,000 renewed for 2 months with interest @ 6% p.a.
(c) B's acceptance of ₹ 3,000 is discharged on his paying us cash ₹ 1,000 and accepting a fresh bill for the balance with interest ₹ 100.

Answer 1

(a)

Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	B	Dr.		1,000
	To Bills Receivable A/c				1,000
	(B’s acceptance was cancelled)
	B	Dr.		15
	To Interest A/c				15
	(Interest due from B)
	Bills Receivable A/c	Dr.		1,015
	To B				1,015
	(New bill was accepted by B including interest)

Working Note:

(b)

Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	Bills Payable A/c	Dr.		5,000
	To C. Chandra				5,000
	(Bill Payable was cancelled)
	Interest A/c	Dr.		50
	To C. Chandra				50
	(Interest at 6% p.a. for 2 month due to C. Chandra)
	C. Chandra	Dr.		5,050
	To Bills Payable A/c				5,050
	(New bill drawn by C. Chandra was accepted)

Working Note:

(c)

Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	B	Dr.		3,000
	To Bills Receivable A/c				3,000
	(B got cancelled his acceptance)
	Cash A/c	Dr.		1,000
	To B				1,000
	(Cash received from B)
	B	Dr.		100
	To Interest A/c				100
	(Interest due from B)
	Bills Receivable A/c	Dr.		2,100
	To B				2,100
	(New bill accepted by B for balance amount including interest)