Question

On 15th October, 2016, Y purchased goods worth ₹ 75,000 from X, and accepted a three months bill for this amount drawn by X. On the due date, it was dishonoured. Noting charges paid by X ₹ 600. On 18th January, 2017, Y requested X for renewal of the bill for another two months, for which X agrees, provided that interest is paid @ 15% p.a. in cash. Make Journal entries of these transactions in the books of X and Y.

Answer 1

Books of X Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
2016
Oct. 15	Y	Dr.		75,000
	To Sales A/c				75,000
	(Goods sold to Y)
Oct. 15	Bills Receivable A/c	Dr.		75,000
	To Y				75,000
	(Y accepted the bill)
2017
Jan. 18	Y	Dr.		75,600
	To Bills Receivable A/c				75,000
	To Cash A/c				600
	(Bill dishonoured on due date and noting charges paid)
Jan. 18	Y	Dr.		1,890
	To Interest A/c				1,890
	(Interest due to be received)
Jan. 18	Cash A/c	Dr.		1,890
	Bills Receivable A/c	Dr.		75,600
	To Y				77,490
	(Y accepted the new bill)
Mar. 21	Cash	Dr.		75,600
	To Bills Receivable A/c				75,600
	(Bill honoured on maturity)

Books of Y Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
2016
Oct. 15	Purchases A/c	Dr.		75,000
	To X				75,000
	(Goods purchased from X)
Oct. 15	X	Dr.		75,000
	To Bills Payable A/c				75,000
	(Bill drawn by X, accepted)
2017
Jan. 18	Bills Payable A/c	Dr.		75,000
	Noting Charges A/c	Dr.		600
	To X				75,600
	(Bill dishonoured on due date and noting charges paid)
Jan. 18	Interest A/c	Dr.		1,890
	To X				1,890
	(Interest due to be paid)
Jan. 18	X	Dr.		77,490
	To Cash A/c				1,890
	To Bills Payable A/c				75,600
	(New bill drawn by X, accepted)
Mar. 21	Bills Payable A/c	Dr.		75,600
	To Cash A/c				75,600
	(Bill honoured on maturity)

Working Note:

Calculation of amount of Interest