Question

Narayanan purchased goods for Rs 25,000 from Ravinderan on Feb. 01, 2016. Ravinderan drew upon Narayanan a bill of exchange for the same amount payable after 30 days. On the due date Narayanan dishonoured his acceptance. Pass the necessary journal entries in the books of Ravinderan and Narayanan in following cases:

· When the bill was retained by Ravinderan with him till the date of its maturity.

· When the bill was discounted by Ravinderan immediately with his bank @ 6% p.a.

· When the bill was endorsed to his creditor Ganeshan.

· When the bill was sent by Ravinderan to his bank for collection a few days before it maturity.

Answer 1

Case (i) : When the bill was retained by Ravinderan with him till the date of its maturity

Books of Ravinderan
Journal
Date			Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2016
Feb.01	Narayanan			Dr.		25,000
		To Sales A/c					25,000
	(Goods sold to Narayanan)
Feb.01	Bills Receivable A/c			Dr.		25,000
		To Narayanan					25,000
	(Narayanan's acceptance received for 30 days)
Mar.05	Narayanan			Dr.		25,000
		To Bills Receivable A/c					25,000
	(Narayanan failed to meet his acceptance and bill dishonoured)

Books of Narayanan
Journal
Date		Particulars				L.F.	Debit Amount Rs	Credit Amount Rs
2016
Feb.01	Purchases A/c			Dr.			25,000
			To Ravinderan					25,000
	(Goods bought from Ravinderan)
Feb.01	Ravinderan			Dr.			25,000
			To Bills Payable A/c					25,000
	(Ravinderan’s bill accepted)
Mar.05	Bills Payable A/c			Dr.			25,000
			To Ravinderan A/c					25,000
	(Bill dishonoured on maturity)

Case (ii) : When the bill was discounted by Ravinderan immediately with his bank @ 6% p.a.

Books of Ravinderan
Journal
Date			Particulars			L.F.	Debit Amount Rs	Credit Amount Rs
2016
Feb.01	Narayanan				Dr.		25,000
				To Sales A/c				25,000
	(Goods sold to Narayanan)
Feb.01	Bills Receivable A/c				Dr.		25,000
				To Narayanan				25,000
	(Narayanan's acceptance received)
Feb.01	Bank A/c				Dr.		24,875
	Discount A/c				Dr.		125
				To Bills Receivable A/c				25,000
	(Narayanan's acceptance got discounted with bank @ 6% p.a.)
Mar.05	Narayanan						25,000
				To Bank A/c				25,000
	(Narayanan's acceptance dishonoured)

Books of Narayanan
Journal
Date	Particulars					L.F.	Debit Amount Rs	Credit Amount Rs
2016
Feb.01	Purchases A/c				Dr.		25,000
		To Ravinderan						25,000
	(Goods bought from Raivnderan)
Feb.01	Ravinderan				Dr.		25,000
		To Bills Payable A/c						25,000
	(Ravinderan’s bill accepted)
Mar.05	Bills Payable A/c				Dr.		25,000
		To Ravinderan						25,000
	(Bill dishonoured on maturity)

Case (iii) : When the bill was endorsed to his creditor Ganeshan

Books of Ravinderan
Journal
Date		Particulars				L.F.	Debit Amount Rs	Credit Amount Rs
2016
Feb.01	Narayanan				Dr.		25,000
			To Sales A/c					25,000
	(Goods sold to Narayanan)
Feb.01	Bills Receivable A/c				Dr.		25,000
				To Narayanan				25,000
	(Narayanan's acceptance received)
Feb.01	Ganeshan				Dr.		25,000
			To Bills Receivable A/c					25,000
	(Narayanan's acceptance endorsed in favour of Ganeshan)
Mar.05	Narayanan				Dr.
			To Ganeshan A/c					25,000
	(Narayanan's acceptance dishonoured)

Books of Narayanan
Journal
Date	Particulars					L.F.	Debit Amount Rs	Credit Amount Rs
2016
Feb.01	Purchases A/c				Dr.		25,000
		To Ravinderan						25,000
	(Goods bought from Ravinderan)
Feb.01	Ravinderan				Dr.		25,000
		To Bills Payable A/c						25,000
	(Ravinderan’s bill accepted)
Mar.05	Bills Payable A/c				Dr.		25,000
		To Ravinderan						25,000
	(Ravinderan’s bill dishonoured on due date)

Case (iv) : When the bill was sent by Ravinderan to his bank for collection a few days before it maturity

Books of Ravinderan
Journal
Date		Particulars				L.F.	Debit Amount Rs	Credit Amount Rs
2016
Feb.01	Narayanan				Dr.		25,000
				To Sales A/c				25,000
	(Goods sold to Narayanan)
Feb.01	Bills Receivable A/c				Dr.		25,000
				To Narayanan				25,000
	(Narayanan's acceptance received)
Feb.01	Bill Sent for Collection A/c				Dr.		25,000
				To Bills Receivable A/c				25,000
	(Bill sent to bank for collection)
Mar.05	Narayanan				Dr.		25,000
			To Bill Sent for Collection A/c					25,000
	(Bill got dishonoured)

Books of Narayanan
Journal
Date		Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2016
Feb.01	Purchases A/c		Dr.		25,000
		To Ravinderan				25,000
	(Bought goods from Ravinderan)
Feb.01	Ravinderan		Dr.		25,000
		To Bills Payable A/c				25,000
	(Ravinderan’s bill accepted)
Mar.05	Bills Payable A/c		Dr.		25,000
		To Ravinderan				25,000
	(Ravinderan’s bill dishonoured)