Question

On 1st January, 2008, A sold goods to B for ₹ 1,00,000 received ₹ 25,000 in cash and drew two bills, first ₹ 45,000 and second for ₹ 30,000 of two months each. Both bills were duly accepted by B. First bill was endorsed to C in settlement of his account of ₹ 45,000 and second bill was discounted from the bank at the rate of 12% p.a. On the due date of these bills, both bills were dishonoured, C has paid ₹ 100 and bank has paid ₹ 80 as noting charges.
Pass Journal entries in the books of A, B and C.

Answer 1

Books of A
Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2008
Jan.01	B	Dr.		1,00,000
	To Sales A/c				1,00,000
	(Goods were sold to B)
Jan.01	Cash A/c	Dr.		25,000
	Bills Receivable A/c (Bill no. 1)	Dr.		45,000
	Bills Receivable A/c (Bill no. 2)	Dr.		30,000
	To B				1,00,000
	(Cash and acceptances were received from B)
Jan.01	C	Dr.		45,000
	To Bill Receivable A/c (Bill no. 1)				45,000
	(Bill endorsed in favour of C)
Jan.01	Bank A/c	Dr.		29,400
	Discount Charges A/c	Dr.		600
	To Bills Receivable (Bill no. 2)				30,000
	(Bill no. 2 discounted with bank at 12% p.a. for 2 months)
	Working Note: Discount Charges = 30,000 × 12% × 2/12
Mar.04	B	Dr.		45,100
	To C				45,100
	(B’s acceptance which had endorsed to C was dishonoured and C paid Rs 100 as noting charges)
Mar.04	B	Dr.		30,080
	To Bank A/c				30,080
	(B’s acceptance which had discounted with bank was dishonoured and bank paid Rs 80 as noting charges)

Journal In the Books of B
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
2008
Jan. 01	Purchases A/c	Dr.		1,00,000
	To A				1,00,000
	(Goods purchased from A)
Jan. 01	A	Dr.		1,00,000
	To Cash A/c				25,000
	To Bills Payable A/c (1)				45,000
	To Bills Payable A/c (2)				30,000
	(Cash and bills given to A)
March 04	Bills Payable A/c (1)	Dr.		45,000
	Bills Payable A/c (2)	Dr.		30,000
	Noting Charges A/c	Dr.		180
	To A				75,180
	(Bills dishonoured)

Journal In the Books of C
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
2008
Jan. 01	Bills Receivable A/c (1)	Dr.		45,000
	To A				45,000
	(Bill received from A)
March 04	A	Dr.		45,100
	To Bills Receivable A/c (1)				45,000
	To Cash A/c				100
	(Bill dishonoured on due date)