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Question

On 1st January, 2106 X sold goods to Y for Rs. 20,000 less 2% cash discount. Y paid 50% price immediately and X drew a bill on Y for two months for the balance. This bill is duly accepted by Y. The bill was dishonoured on the due date and X paid Rs. 100 as nothing charges. Y paid the amount due to X by cheque after ten days. Pass entries in the books of both the parties.

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Solution

In the Books of X
JOURNAL
Date ParticularsL.F.Amt. (Dr.)Amt. (Cr.)2016Jan 1Y's A/c Dr.20,000 To Sales A/c20,000(Goods sold to Y) –––––––––––––––––––––––––––––––––––––––––––––––––––––Jan 1Cash A/c Dr. 9,800Discount Allowed A/c (10,000×2%) Dr. 200 To Y's A/c (20,000×50%)10,000(Cash received from Y and discount allowed at 2%)––––––––––––––––––––––––––––––––––––––––––––––––––––––Jan 1Bills Receivable A/c Dr.10,000 To Y's A/c10,000(Acceptance received for 2 months) –––––––––––––––––––––––––––––––––––––––––––––––––––––Mar 4Y's A/c Dr.10,100 To Bills Receivable A/c10,000 To Cash A/c 100(Bill dishonoured and noting charges paid) –––––––––––––––––––––––––––––––––––––––––––––––––––––Mar 14Bank A/c Dr.10,100 To Y's A/c10,100(Amount received)

In the Books of Y
JOURNAL
Date ParticularsL.F.Amt. (Dr.)Amt. (Cr.)2016Jan 1Purchases A/c Dr.20,000 To X's A/c20,000(Goods purchased from X) ––––––––––––––––––––––––––––––––––––––––––––––––––Jan 1X's A/c Dr.10,000 To Cash A/c9,800 To Discount Received A/c 200(Cash paid to X and discount received at 2%) ––––––––––––––––––––––––––––––––––––––––––––––––––Jan 1X's A/c Dr.10,000 To Bills Payable A/c10,000(Acceptance given for 2 months) ––––––––––––––––––––––––––––––––––––––––––––––––––Mar 4Bills Payable A/c Dr.10,000Noting Charges A/c Dr. 100 To X's A/c10,100(Bill dishonoured and noting charges paid by X)––––––––––––––––––––––––––––––––––––––––––––––––––Mar 14X's A/c Dr.10,100 To Bank A/c10,100(Amount paid)


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