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Question

On 15th June, 2019, Mohan sold goods to Sohan valued at ₹ 2,000. He drew a bill at 3 months for the amount and discounted the same with his bank for ₹ 1,960. On the due date the bill was dishonoured and Mohan paid to the bank the amount due plus the noting charges of ₹ 10.
Draft the Journal entries in the books of all parties.

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Solution

Books of Mohan

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2019

June 15

Sohan

Dr.

2,000

To Sales A/c

2,000

(Goods sold to Sohan)

June 15

Bills Receivable A/c

Dr.

2,000

To Sohan

2,000

(Sohan’s acceptance was received)

June 15

Bank A/c

Dr.

1,960

Discount Charges A/c

Dr.

40

To Bills Receivable A/c

2,000

(Sohan’s acceptance discounted with bank)

Sep.18

Sohan

Dr.

2,010

To Bank A/c

2,010

(Sohan’s acceptance became dishonoured and Bank paid Rs 10 Noting Charges)

Sep.18

Bank A/c

Dr.

2,010

To Cash A/c

2,010

(Liabilities on account bill dishonoured was discharged)

Books of Sohan

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2019

June 15

Purchases A/c

Dr.

2,000

To Mohan

2,000

(Goods were bought from Sohan)

June 15

Mohan

Dr.

2,000

To Bills Payable A/c

2,000

(Bills drawn by Mohan was accepted)

Sep.18

Bills Payable A/c

Dr.

2,000

Noting Charges A/c

Dr.

10

To Mohan

2,010

(Bills Payable became dishonoured)


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