Question

On 1st January 2016, R drew on M, who is his debtor for Rs. 30,000, three bills of exchange : First for Rs. 8,000 at one month, second for Rs. 10,000 at two months and third for Rs. 12,000 at three months. M accepted all the three bills.

On 10th January, 2016, R endorsed the first bill to his creditor S in full settlement of his account of Rs. 8,240. This bill was duly met on maturity.

On 20th January, 2016, the second bill was discounted from the bank for Rs. 9,700. This bill was dishonoured on the due date and bank paid Rs 80 as noting charges. On M's request R drew a fourth bill on M, for 2 months for the amount due plus Rs. 400 as interest.

Third bill was paid under a rebate of $15\%$ per annum one month before maturity. The fourth bill was sent to bank for collection on 4th May, 2016 and was duly met on maturity.

Pass journal entries in the books of R.

Answer 1

$\text{In the Books of R}\text{JOURNAL}\begin{array}{ccccccc}\text{Date}& \text{Particulars}& & \text{L.F.}& \text{Amt. (Dr.)}& \text{Amt. (Cr.)}& \\ 2016& & & & & & \\ \text{Jan 1}& \text{Bills Receivable A/c (No. I)}& \text{Dr.}& & 8,000& & \\ & \text{Bills Receivable A/c (No. II)}& \text{Dr.}& & 10,000& & \\ & \text{Bills Receivable A/c (No. III)}& \text{Dr.}& & 12,000& & \\ & \text{To M's A/c}& & & & 30,000& \\ & \text{(Three bills' acceptance received)}& & & & & \\ & \underset{–}{}& & & & & \\ \text{Jan 10}& \text{S's A/c}& \text{Dr.}& & 8,240& & \\ & \text{To Bills Receivable A/c}& & & & 8,000& \\ & \text{To Discount Received A/c}& & & & 240& \\ & \text{(First bill endorsed to S in full settlement of his account of}& & & & & \\ & \text{Rs. 8,240)}& & & & & \\ & \underset{–}{}& & & & & \\ \text{Jan 20}& \text{Bank A/c}& \text{Dr.}& & 9,700& & \\ & \text{Discounting Charges A/c}& \text{Dr.}& & 300& & \\ & \text{To Bills Receivable A/c}& & & & 10,000& \\ & \text{(Second bill discounted from the bank)}& & & & & \\ & \underset{–}{}& & & & & \\ \text{Mar 4}& \text{M's A/c}& \text{Dr.}& & 10,080& & \\ & \text{To Bank A/c (10,000+ 80)}& & & & 10,080& \\ & \text{(Second bill dishonoured and noting charges paid by the}& & & & & \\ & \text{bank)}& & & & & \\ & \underset{–}{}& & & & & \\ \text{Mar 4}& \text{M's A/c}& \text{Dr.}& & 400& & \\ & \text{To Interest A/c}& & & & 400& \\ & \text{(Interest receivable)}& & & & & \\ & \underset{–}{}& & & & & \\ \text{Mar 4}& \text{Bills Receivable A/c (No. IV)(10,080+400)}& \text{Dr.}& & 10,480& & \\ & \text{To M's A/c}& & & & 10,480& \\ & \text{(New bill received including Rs. 80 as noting charges}& & & & & \\ & \text{and Rs. 400 as interest)}& & & & & \\ & \underset{–}{}& & & & & \\ \text{Mar 4}& \text{Bank A/c}& \text{Dr.}& & 11,850& & \\ & \text{Rebate on Bill A/c}(12,000\times \frac{15}{100}\times \frac{1}{12})& \text{Dr.}& & 150& & \\ & \text{To Bills Receivable A/c}& & & & 12,000& \\ & \text{(Payment of the third bill received before maturity and rebate}& & & & & \\ & \text{allowed)}& & & & & \\ & \underset{–}{}& & & & & \\ \text{May 4}& \text{Bill Sent Collection A/c}& \text{Dr.}& & 10,480& & \\ & \text{To Bills Receivable A/c}& & & & 10,480& \\ & \text{(Fourth bill sent to bank for collection)}& & & & & \\ & \underset{–}{}& & & & & \\ \text{May 7}& \text{Bank A/c}& \text{Dr.}& & 10,480& & \\ & \text{To Bill Sent for Collection A/c}& & & & 10,480& \\ & \text{(Bill collected by bank on maturity)}& & & & & \end{array}$