Question

On 15th April, 2012, B accepted three bills of exchange for Rs 2,400: first bill for Rs 700 for one month; second bill for Rs 800 for two months; and third bill for Rs 900 for three months duly written by A.

On 20th April, 2012, A endorsed the first bill to his creditor C to clear his account of Rs 710 and discounted the second bill on 22nd April with his bankers for Rs 792. The third bill was retained by A till maturity.

The first bill was met on maturity but the second bill was dishonoured on due date. Bank paid Rs 10 for noting charges. A charges B Rs 15 for interest and drew on him a fourth bill for Rs 825 for three months and B accepted it and returned. Bill No.3 and 4 were met on maturity. Pass necessary Journal entries in the books of 'A'.

Answer 1

Journal Entries In the books Of A

$\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{LF}& \text{Debit Amount (Rs)}& \text{Credit Amount (Rs)}\\ & & & & & \\ \text{2012}& & & & & \\ \text{Apr. 15}& \text{Bills Receivable No. 1 A/c}& \text{Dr.}& & \text{700}& \\ & \text{Bills Receivable No. 2 A/c}& \text{Dr.}& & \text{800}& \\ & \text{Bills Receivable No. 3 A/c}& \text{Dr.}& & \text{900}& \\ & \text{To B A/c}& & & & \text{2,400}\\ & \text{(Being three acceptances received from B)}& & & & \\ & \text{first for Rs 700 at one month, 2nd for Rs 800}& & & & \\ & \text{at two months, and the 3rd for Rs 900 at}& & & & \\ & \text{three months)}& & & & \\ & \underset{–}{}& & & & \\ \text{Apr. 20}& \text{C A/c}& \text{Dr.}& & \text{710}& \\ & \text{To Bills Receivable No. 1 A/c}& & & & \text{700}\\ & \text{To Discount A/c}& & & & \text{10}\\ & \text{(Being the 1st bill endorsed to C in full}& & & & \\ & \text{settlement of Rs 710)}& & & & \\ & \underset{–}{}& & & & \\ \text{Apr. 22}& \text{Cash A/c}& \text{Dr.}& & \text{792}& \\ & \text{Discount A/c}& \text{Dr.}& & \text{8}& \\ & \text{To Bills Receivable No. 2 A/c}& & & & \text{800}\\ & \text{(Being the 2nd bill discounted)}& & & & \\ & \underset{–}{}& & & & \\ \text{June, 18}& \text{B A/c}& \text{Dr.}& & \text{810}& \\ & \text{To Bank A/c}& & & & \\ & \text{(Being 2nd acceptance dishonoured and)}& & & & \text{810}\\ & \text{Rs 10 paid as noting charges)}& & & & \\ & \underset{–}{}& & & & \\ \text{June, 18}& \text{B A/c}& \text{Dr.}& & \text{15}& \\ & \text{To Interest A/c}& & & & \text{15}\\ & \text{(Being interest due on B)}& & & & \\ & \underset{–}{}& & & & \\ \text{June, 18}& \text{Bills Receivable No. 4 A/c}& \text{Dr.}& & \text{825}& \\ & \text{To B}& & & & \text{825}\\ & \text{(Being acceptance of 4th bill by B including}& & & & \\ & \text{noting charges and interest received)}& & & & \\ & \underset{–}{}& & & & \\ \text{July, 18}& \text{Cash A/c}& \text{Dr.}& & \text{900}& \\ & \text{To Bills Receivable No. 3 A/c}& & & & \text{900}\\ & \text{(Being the 3rd bill met on maturity)}& & & & \\ & \underset{–}{}& & & & \\ \text{Sep, 21}& \text{Cash A/c}& \text{Dr.}& & \text{825}& \\ & \text{To Bills Receivable No. 4 A/c}& & & & \text{825}\\ & \text{(Being payment of 4th bill received)}& & & & \end{array}$