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Question

On 1st January, 2010, Arun purchased from Barun goods invoiced at ₹ 10,000. On the same date, Barun drew upon Arun a bill for the amount at 2 months and Arun accepted the same. On 4th January, 2010, Barun got the bill discounted with his bank @12% per annum. On due date, Arun told Barun that he was not in a position to pay the full amount and requested Barun to accept ₹ 5,000 in cash and draw a fresh bill at 2 months for the remaining amount plus interest at 15% per annum, Barun agreed. The second bill was duly met on the due date.
Give journal entries to record the above transactions in the books of Barun.


Solution

Books of Barun
Journal
Date
Particulars
L.F.
Debit
Amount
(Rs)
Credit
Amount
(Rs)
2010
     
 
 
Jan. 01
Arun
Dr.
 
10,000
 
 
  To Sales A/c    
 
10,000
 
(Goods sold to Arun)    
 
 
 
     
 
 
Jan. 01
Bills Receivable A/c
Dr.
 
10,000
 
 
  To Arun    
 
10,000
 
(Arun accepted the bill)    
 
 
 
     
 
 
Jan. 04
Bank A/c
Dr.
 
9,800
 
 
Discounting Charges A/c
Dr.
 
200
 
 
  To Bills Receivable A/c    
 
10,000
 
(Bill discounted with the bank @ 12% p.a. for 2 months)    
 
 
 
     
 
 
Mar. 04
Arun
Dr.
 
10,000
 
 
  To Bank A/c    
 
10,000
 
(Bill cancelled on due date)    
 
 
 
     
 
 
Mar. 04
Cash
Dr.
 
5,000
 
 
  To Arun    
 
5,000
 
(Cash received from Arun)    
 
 
 
     
 
 
Mar. 04
Arun
Dr.
 
125
 
 
  To Interest A/c    
 
125
 
(Interest due to be received)    
 
 
 
     
 
 
Mar. 04
Bills Receivable A/c
Dr.
 
5,125
 
 
  To Arun    
 
5,125
 
(Arun accepted the new bill)    
 
 
 
     
 
 
May 07
Cash A/c
Dr.
 
5,125
 
 
  To Bills Receivable A/c    
 
5,125
 
(Bill honoured on due date    
 
 

Working Note:

WN 1Calculation of Discounting Charges

Discounting Charges= 10,000×12100×212=Rs 200 

WN2 Calculation of amount of Interest

 Amount of Interest= 5,000×15100×212=Rs 125


Accountancy
DK Goel (2019)
All

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