Question

Nikhil sold goods for Rs. 23,000 to akhil on December 1, 2010. He drew upon Akhil a bill of exchange for the same amount payable after 2 months. Akhil accepted the bill and sent it back to Nikhil. Nikhil Discounted the bill immediately with his bank at the rate of 12% per annum. ON the due date, Akhil dishonoured the bill of exchhange and the bank paid Rs. 100 as noting charges. Akhil requested Nikhil to draw a new bill upon him with interest at the rate of 10% per annum which he agreed. The New bill was payable after two months. A week before the maturity of the second bill Akhil requested Nikhil to cancel the second bill. He further requested to accept Rs. 10,000 in cash immediately and drew a third bill upon him including interest of Rs 500 Nikhil agreed to Akhil request. The third bill was payable after one month. Akhil met the third bill on its maturity. Record the necessary Journal entries in the books of Nikhil and Akhil and also prepare Akhil's account in the books of Nikhil and Nikhil's account in the books of Akhil.

Answer 1

In the Books of Nikhil Journal Entries
$$\begin{array}{ccccc}\text{Date}& \text{Particular}& \text{LF}& \text{Amt.(Dr.)}& \text{Amt. (Cr)}\\ 2010& & & & \\ \text{Dec 1}& \text{Akhil}\text{Dr}& & 23,000& \\ & \text{To Sales A/c}& & & 23,000\\ & \text{(Being goods sold to akhil)}& & & \\ & \underset{–}{}& & & \\ \text{Dec 1}& \text{Bills Receivable A/c}\text{Dr}& & 23,000& \\ & \text{To Akhil}& & & 23,000\\ & \text{(Being Acceptance received)}& & & \\ & \underset{–}{}& & & \\ \text{Dec 1}& \text{Bank A/c}\text{Dr}& & 22,540& \\ & \text{Discount A/c}\text{Dr}& & 460& \\ & \text{Toi Bills Receivable A/c}& & & 23,000\\ & \text{(Being bill discounted with the bank at the rate of 12\%)}& & & \\ & \underset{–}{}& & & \\ \text{Feb 4}& \text{Akhil}\text{Dr}& & 23,100& \\ & \text{To Bank A/c}& & & 23,100\\ & \text{Being bills dishonoured and noting charges paid By bank}& & & \\ & \underset{–}{}& & & \\ \text{Feb 4}& \text{Akhil}\text{Dr}& & 385& \\ & \text{To Interest A/c}& & & 385\\ & \text{(Being interest at the rate of 10\% per annum due)}& & & \\ & \underset{–}{}& & & \\ \text{Feb 4}& \text{Bills receivable A/c}\text{Dr}& & 23,485& \\ & \text{To Akhil}& & & 23,485\\ & \text{(Being new acceptance received along with interest)}& & & \\ & \underset{–}{}& & & \\ \text{Apr 1}& \text{Akhil}\text{Dr}& & 23,485& \\ & \text{to Bills Receivable A/c}& & & 23,485\\ & \text{(Being second acceptance cancelled before maturity )}& & & 23,485\\ & \underset{–}{}& & & \\ \text{Apr 1}& \text{Cash A/c}\text{Dr}& & 10,000& \\ & \text{To Akhil}& & & 10,000\\ & \text{(Being cash received from Akhil Rs. 10,000)}& & & \\ & \underset{–}{}& & & \\ \text{Apr 1}& \text{Akhil}\text{Dr}& & 500& \\ & \text{To Interest A/c}& & & 500\\ & \text{(Being interest due from akhil for the bill)}& & & \\ & \underset{–}{}& & & \\ \text{Apr 1}& \text{Bills Receivable A/c}\text{Dr}& & 13,985& \\ & \text{To Akhil}& & & 13,985\\ & \text{(Being bill from akhil received)}& & & \\ & \underset{–}{}& & & \\ \text{Apr 1}& \text{Cash A/c}\text{Dr}& & 13,985& \\ & \text{To BIlls Receivable A/c}& & & 13,985\\ & \text{(Being payment received on maturity)}& & & \end{array}$$

Dr Akhil's Account Cr
$$\begin{array}{cccccccc}\text{Date}& \text{Particular}& \text{JF}& \text{Amt. (Rs.)}& \text{Date}& \text{Particular}& \text{Jf}& \text{Amt. (Rs.)}\\ 2010& & & & 2010& & & \\ \text{Dec 1}& \text{To Sales A/c}& & 23,000& \text{Dec 1}& \text{By bills}& & \\ & & & & & \text{Receivable A/c}& & 23,000\\ \text{Feb 4}& \text{To Bank A/c}& & 23,100& \text{Feb 4}& \text{By bills}& & \\ & & & & & \text{Receivable A/c}& & 23,485\\ \text{Feb 4}& \text{To Interest A/c}& & 385& \text{Apr 1}& \text{By Cash A/c}& & 23,485\\ \text{Apr 1}& \text{To Bills}& & & \text{Apr 1}& \text{By Bills}& & \\ & \text{Receivable A/c}& & 23,485& & \text{Receivable A/c}& & 13,985\\ \text{Apr 1}& \text{To interest A/c}& & 500& & & & \\ & & & \underset{–}{}& & & & \underset{–}{}\\ & & & 70,470& & & & 70,470\\ & & & \underset{–}{}& & & & \underset{–}{}\end{array}$$
In The Books of Akhil Journal Entries
$$\begin{array}{cccccc}\text{Date}& \text{Particular}& \text{LF}& \text{Amt.(Dr.)}& \text{Amt. (Cr)}& \\ 2010& & & & & \\ \text{Dec 1}& \text{Purchase A/c}\text{Dr}& & 23,000& & \\ & \text{To Nikhil}& & & 23,000& \\ & \text{(Being goods Purchased for Nikhil)}& & & & \\ & \underset{–}{}& & & & \\ \text{Dec 1}& \text{Nikhil}\text{Dr}& & 23,000& & \\ & \text{To Bill payabgle A/c}& & & 23,000& \\ & \text{(Being Acceptance Given)}& & & & \\ & \underset{–}{}& & & & \\ \text{Dec 1}& \text{Bills Payable A/c}\text{Dr}& & 23,000& & \\ & \text{Noting Charges A/c}\text{Dr}& & 100& & \\ & \text{Toi Nikhil}& & & 23,000& \text{(Being bill discounted and noting charge due)}\\ & \underset{–}{}& & & & \\ \text{Feb 4}& \text{Interest A/c}\text{Dr}& & 385& & \\ & \text{To Nikhil}& & & 385& \\ & \text{Being Interest at the rate of 10\% due}& & & & \\ & \underset{–}{}& & & & \\ \text{Feb 4}& \text{Nikhil}\text{Dr}& & 23,485& & \\ & \text{To Bill Payable A/c}& & & 23,485& \\ & \text{(Being New Acceptance given along with interest)}& & & & \\ & \underset{–}{}& & & & \\ \text{Apr 1}& \text{Bills Payable A/c}\text{Dr}& & 23,485& & \\ & \text{To Nikhil}& & & 23,485& \\ & \text{(Being Second Acceptance cancelled before maturity)}& & & & \\ & \underset{–}{}& & & & \\ \text{Apr 1}& \text{Nikhil}\text{Dr}& & 10,000& & \\ & \text{to To Cash a/c}& & & 10,000& \\ & \text{(Being Being Cash given to nikhil )}& & & & \\ & \underset{–}{}& & & & \\ \text{Apr 1}& \text{Interest A/c}\text{Dr}& & 500& & \\ & \text{To Nikhil}& & & 500& \\ & \text{(Being Interest Due to Nikhil for billo cancellation)}& & & & \\ & \underset{–}{}& & & & \\ \text{Apr 1}& \text{Nikhil}\text{Dr}& & 13,985& & \\ & \text{To Bills Payable A/c}& & & 13,985& \\ & \text{(Being New bills Accepted payable after one month)}& & & & \\ & \underset{–}{}& & & & \\ \text{Apr 1}& \text{Nikhil A/c}\text{Dr}& & 13,985& & \\ & \text{To Bills Payabe}& & & 13,985& \\ & \text{(Being New bill accepted payable after one month)}& & & & \\ & \underset{–}{}& & & & \\ \text{Apr 1}& \text{Bills Payable A/c}\text{Dr}& & 13,985& & \\ & \text{To Cash A/c}& & & 13,985& \\ & \text{(Being payment Made on maturity)}& & & & \end{array}$$
Dr Nikhil' Account Cr
$$\begin{array}{cccccccc}\text{Date}& \text{Particulars}& \text{JF}& \text{Amt.(Rs)}& \text{Date}& \text{Particulars}& \text{JF}& \text{Amt. (Rs)}\\ 2010& & & & 2010& & & \\ \text{Dec 1}& \text{To Bills Payable}& & & \text{Dec 1}& \text{By purchase a/c}& & 23,000\\ & \text{A/c}& & 23,000& & & & \\ \text{Feb 4}& \text{To Bills Payable}& & & \text{feb 4}& \text{By Bills Payable}& & \\ & \text{A/c}& & 23,485& & \text{A/c}& & 23,000\\ \text{Apr 1}& \text{To Cash A/c}& & 10,000& \text{Feb 4}& \text{BY Noting}& & \\ & & & & & \text{Charges A/c}& & 100\\ \text{Apr 1}& \text{To Bills Payable}& & & \text{Feb 4}& \text{BY Bills Payable}& & \\ & \text{A/c}& & 13,985& \text{Mar 31}& \text{By Bills Payable}& & \\ & & & & & \text{a/c}& 23,485& \\ & & & & \text{Mar 31}& \text{By interest a/c}& & 500\\ & & & \underset{–}{}& & & & \underset{–}{}\\ & & & 70,470& & & & \\ & & & \underset{–}{}& & & & \underset{–}{}\end{array}$$