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Question

On 15th February, 2019, X sold goods to Y for ₹ 60,000. On the same day, Y accepted a bill drawn upon him by X for three months for ₹ 60,000. X immediately discounted the bill at 15% p.a. at his bank and Y met the bill on maturity. Make Journal entries in the books of both the parties.

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Solution

Books of X
Journal
Date
Particulars
L.F.
Debit
Amount
(₹)
Credit
Amount
(₹)
2019
Feb. 15
Y Dr.
60,000
To Sales A/c
60,000
(Goods sold to Y)
Feb. 15
Bills Receivable A/c Dr.
60,000
To Y
60,000
(Y accepted the bill)
Feb. 15
Bank A/c Dr.
57,750
Discounting Charges A/c Dr.
2,250
To Bills Receivable A/c
60,000
(Bill discounted with bank @ 15% p.a. for 3 months)
Books of Y
Journal
Date
Particulars
L.F.
Debit
Amount
(₹)
Credit
Amount
(₹)
2017
Feb. 15
Purchases A/c Dr.
60,000
To X
60,000
(Goods purchased from X)
Feb. 15
X Dr.
60,000
To Bills Payable A/c
60,000
(Bill drawn by X, accepted)
May 18
Bills Payable A/c Dr.
60,000
To Cash A/c
60,000
(Bill honoured on maturity)

Working Note:

Calculation of Discounting Charges

Discounting Charges= 6,000×15100×312=Rs 225


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