Question

Manohar drew a bill of exchange on Pushkar, his debtor, for ₹ 20,000 on 1st March 2016 for 3 months. Pushkar accepted the same and returned it to the drawer. Manohar endorsed the bill to Yadu on 1st April 2016 for a debt of equal amount. Yadu discounted it with the bank at 15% p.a. on 1st May 2016. On the due date the bill was dishonoured. (Noting charges amounted to ₹ 100).
Show the journal entries in the books of :
(a) Drawer, (b) Drawee/Acceptor, and (c) Endorsee

Answer 1

Books of Manohar Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
2016
Mar. 01	Bills Receivable A/c	Dr.		20,000
	To Pushkar				20,000
	(Pushkar accepted the bill)
Apr. 01	Yadu	Dr.		20,000
	To Bills Receivable A/c				20,000
	(Bills endorsed in favour of Yadu)
June 04	Pushkar	Dr.		20,100
	To Yadu				20,100
	(Bill dishonoured on due date and noting charges paid by Yadu)

Books of Pushkar Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
2016
Mar. 01	Manohar	Dr.		20,000
	To Bills Payable A/c				20,000
	(Bill drawn by Manohar, accepted)
June 04	Bills Payable A/c	Dr.		20,000
	Noting Charges A/c	Dr.		100
	To Manohar				20,100
	(Bill dishonoured on due date and noting charges paid)

Books of Yadu Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
2016
Apr. 01	Bills Receivable A/c	Dr.		20,000
	To Manohar				20,000
	(Bills receivable, received from Manohar)
May 01	Bank A/c	Dr.		19,750
	Discounting Charges A/c	Dr.		250
	To Bills Receivable A/c				20,000
	(Bill discounted with the bank @ 15% p.a. for 1 month)
June 04	Manohar	Dr.		20,100
	To Bank A/c				20,100
	(Bill dishonoured on due date and noting charges paid)

Working Note:

Calculation of Discounting Charges

$\mathrm{Discounting}\mathrm{Charges}=20,000\times \frac{15}{100}\times \frac{1}{12}=\mathrm{Rs}250$