Question

On 1st January, 2016, V sold goods worth Rs. 36,000 to S and drew upon the latter bills of exchange for the same amount payable afte two months. S accepted V's draft and returned the same to V after acceptance. V endorsed the bill immediately in favour of his creditor G. Five days before the maturity of the bill S requested V to cancel the bill since he was in short of funds. He further requested to draw a new bill upon him including interest of Rs. 400. V accepted S's request. V took the bill from G by making the payment to him in cash and cancelled the same. Then he drew a new bill upon S as agreed. The new bill was payable after one month. The new bill was duly met by S on maturity.
Record the necessary journal entries in the books of V.

Answer 1

$\text{In the Books of V}\text{JOURNAL}\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F.}& \text{Amt. (Dr.)}& \text{Amt (Cr.)}\\ 2016& & & & & \\ \text{Jan 1}& \text{S's A/c}& \text{Dr.}& & 36,000& \\ & \text{To Sales A/c}& & & & 36,000\\ & \text{(Goods sold to S)}& & & & \\ & \underset{–}{}& & & & \\ \text{Jan 1}& \text{Bills Receivable A/c}& \text{Dr.}& & 36,000& \\ & \text{To S's A/c}& & & & 36,000\\ & \text{(Acceptance received from S)}& & & & \\ & \underset{–}{}& & & & \\ \text{Jan 1}& \text{G's A/c}& \text{Dr.}& & 36,000& \\ & \text{To Bills Receivable A/c}& & & & 36,000\\ & \text{(Bill endorsed to G)}& & & & \\ & \underset{–}{}& & & & \\ \text{Feb 27}& \text{S's A/c}& \text{Dr.}& & 36,000& \\ & \text{To G's A/c}& & & & 36,000\\ & \text{(Cancellation of the bill received from now with G)}& & & & \\ & \underset{–}{}& & & & \\ \text{Feb 27}& \text{G's A/c}& \text{Dr.}& & 36,000& \\ & \text{To Bank A/c}& & & & 36,000\\ & \text{(Payment made to G)}& & & & \\ & \underset{–}{}& & & & \\ \text{Feb 27}& \text{S's A/c}& \text{Dr.}& & 400& \\ & \text{To Interest A/c}& & & & 400\\ & \text{(Interest receivable received from S)}& & & & \\ & \underset{–}{}& & & & \\ \text{Feb 27}& \text{Bills Receivable A/c (36,000+400)}& \text{Dr.}& & 36,400& \\ & \text{To S's A/c}& & & & 36,400\\ & \text{(Renewed bill received from S)}& & & & \\ & \underset{–}{}& & & & \\ \text{Mar 30}& \text{Bank A/c}& \text{Dr.}& & 36,400& \\ & \text{To Bills Receivable A/c}& & & & 36,400\\ & \text{(Renewed bill met on maturity )}& & & & \end{array}$