Question

On 1st January, 2018, X received from Y three Bills of Exchange for ₹ 6,000; ₹ 8,000; and ₹ 10,000 for 6 months, 4 months and 3 months respectively. On 3rd January the first bill was discounted by X with his bankers at a discount of 5% p.a. On 1st February the 3rd bill was endorsed in favour of a creditor Z. The second bill was retained till the due date. On due dates all the three bills were dishonoured.
Show the necessary Journal entries in the books of X and Y.

Answer 1

Books of X
Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2018
Jan.01	Bills Receivable A/c (Bill no 1)	Dr.		6,000
	Bills Receivable A/c (Bill no 2)	Dr.		8,000
	Bills Receivable A/c (Bill no 3)	Dr.		10,000
	To Y				24,000
	(Y’s acceptance was received)
Jan.03	Bank A/c	Dr.		5,850
	Discount Charges A/c	Dr.		150
	To Bills Receivable A/c (Bill no 1)				6,000
	(Bill no 1 validity for 6 months was discounted with bank at 5% p.a)
Feb.01	Z	Dr.		10,000
	To Bills Receivable A/c (Bill no 3)				10,000
	(Bill no 3 was endorsed in favour of Z)
April 04	Y	Dr.		10,000
	To Z A/c				10,000
	(Bill no 3 validity for 3 months was dishonoured on due date)
May 04	Y	Dr.		8,000
	To Bills Receivable A/c (Bill no 2)				8,000
	(Bill no 2 validity for 4 month was dishonoured on due date)
July 04	Y			6,000
	To Bank A/c				6,000
	(Bill no 1 validity for 6 months was dishonoured on due date)

Books of Y
Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2018
Jan.01	X	Dr.		24,000
	To Bills Payable A/c (Bill no 1)				6,000
	To Bills Payable A/c (Bill no 2)				8,000
	To Bills Payable A/c (Bill no 3)				10,000
	(Three bill drawn by X were accepted)
April 04	Bills Payable A/c (Bill no 3)	Dr.		10,000
	To X				10,000
	(Bill no 3 was not honoured)
May 04	Bills Payable A/c (Bill no 2)	Dr.		8,000
	To X				8,000
	(Bill no 2 validity for 3 months was not honoured)
July 04	Bills Payable A/c (Bill no 1)	Dr.		6,000
	To X				6,000
	(Bill no 1 validity for 6 months was dishonoured)