Question

On 1st February 2018, A sold goods to B for ₹ 40,000 Charging CGST and SGST @ 9% each. B pays ₹ 17,200 in cash and accepted a three months bill for the balance. On the due date, B expressed his inability to meet the bill and offered ₹ 12,000 in cash and to accept a new bill for one month for the balance plus interest at 18% p.a. A agrees to the proposal. On the due date the bill was duly honoured by B. Pass entries in the books of A and B.

Answer 1

Books of A Journal
Date	Particulars		L.F.	Debit Amount (₹)	Credit Amount (₹)
2018
Feb. 01	B	Dr.		47,200
	To Sales A/c				40,000
	To Output CGST A/c				3,600
	To Output SGST A/c				3,600
	(Goods sold to B plus 9% intra-state GST)
Feb. 01	Cash A/c	Dr.		17,200
	Bills Receivable A/c	Dr.		30,000
	To B				40,000
	(Rs 17,200 received in cash from B and he accepted the bill for the remaining amount)
May 04	B	Dr.		30,000
	To Bills Receivable A/c				30,000
	(Bill cancelled on due date)
May 04	Cash	Dr.		12,000
	To B				12,000
	(Rs 12,000 received in cash from B)
May 04	B	Dr.		270
	To Interest A/c				270
	(Interest due to be received)
May 04	Bills Receivable A/c	Dr.		18,270
	To B				18,270
	(B accepted the new bill)
June 07	Cash A/c	Dr.		18,270
	To Bills Receivable A/c				18,270
	(Bill honoured on due date)

Books of B Journal
Date	Particulars		L.F.	Debit Amount (₹)	Credit Amount (₹)
2018
Feb. 01	Purchases A/c	Dr.		40,000
	Input CGST A/c	Dr.		3,600
	Input SGST A/c	Dr.		3,600
	To A				47,200
	(Goods purchased from A)
Feb. 01	A	Dr.		47,200
	To Cash A/c				17,200
	To Bills Payable A/c				30,000
	(Rs 17,200 paid in cash and for the remaining amount bill has been accepted)
May 04	Bills Payable A/c	Dr.		30,000
	To A				30,000
	(Bill cancelled on due date)
May 04	A	Dr.		12,000
	To Cash A/c				12,000
	(Rs 12,000 paid in cash to A)
May 04	Interest A/c	Dr.		270
	To A				270
	(Interest due to be paid)
May 04	A	Dr.		18,270
	To Bills Payable A/c				18,270
	(New Bill drawn by A, accepted)
June 07	Bills Payable A/c	Dr.		18,270
	To Cash A/c				18,270
	(Bill honoured on due date)

Working Note:

Calculation of amount of Interest

$\mathrm{Amount}\mathrm{of}\mathrm{Interest}=18,000\times \frac{18}{100}\times \frac{1}{12}=\mathrm{Rs}270$