Question

On 1st January, X sold goods worth Rs. 1,00,000 to Y and drew a bill on Y at 3 months for the amount. Y accepted the bill and returned it to X who endorsed the bill a month after the acceptance, in favour of a creditor Z in full settlement of his debt for Rs. 1,02,000. The bill is duly honoured at maturity. Pass the necessary journal entries in the books of X, Y and Z.

Answer 1

In the Books of X
JOURNAL
$\begin{array}{ccccc}\text{Date}& \text{Particulars}& L.F.& \text{Amt. (Dr.)}& \text{Amt. (Cr.)}\\ \text{Jan 1}& \text{Y's A/c}\text{Dr.}& & 1,00,000& \\ & \text{To Sales A/c}& & & 1,00,000\\ & \underset{–}{\text{(Goods sold to Y on credit)}}& & & \\ \text{Jan 1}& \text{Bills Receivable A/c}\text{Dr.}& & 1,00,000& \\ & \text{To Y's A/c}& & & 1,00,000\\ & \underset{–}{\text{(Acceptance of the bill received from Y)}}& & & \\ \text{Feb 1}& \text{Z's A/c}\text{Dr.}& & 1,02,000& \\ & \text{To Bills Receivable A/c}& & & 1,00,000\\ & \text{To Discount Received A/c}& & & 2,000\\ & \text{(Bill of Rs. 1,00,000 endorsed to Z in full settlement of)}& & & \\ & \text{Rs. 1,02,000)}& & & \end{array}$

In the Books of Y
JOURNAL
$\begin{array}{ccccc}\text{Date}& \text{Particulars}& L.F.& \text{Amt. (Dr.)}& \text{Amt. (Cr.)}\\ \text{Jan 1}& \text{Purchases A/c}\text{Dr.}& & 1,00,000& \\ & \text{To X's A/c}& & & 1,00,000\\ & \underset{–}{\text{(Goods purchased on credit from X)}}& & & \\ \text{Jan 1}& \text{X's A/c}\text{Dr.}& & 1,00,000& \\ & \text{To Bills Payable A/c}& & & 1,00,000\\ & \underset{–}{\text{(Acceptance of the bill given to X)}}& & & \\ \text{Apr 4}& \text{Bills Payable A/c}\text{Dr.}& & 1,00,000& \\ & \text{To Bank A/c}& & & 1,00,000\\ & \text{(Bill discharged)}& & & \end{array}$

In the Books of Z
JOURNAL
$\begin{array}{ccccc}\text{Date}& \text{Particulars}& L.F.& \text{Amt. (Dr.)}& \text{Amt. (Cr.)}\\ \text{Feb 1}& \text{Bills Receivable A/c}\text{Dr.}& & 1,00,000& \\ & \text{Discount Allowed A/c}\text{Dr.}& & 2,000& \\ & \text{To X's A/c}& & & 1,02,000\\ & \underset{–}{\text{(Receipt of a duly endorsed bill)}}& & & \\ \text{Apr 4}& \text{Bank A/c}\text{Dr.}& & 1,00,000& \\ & \text{To Bills Receivable A/c}& & & 1,00,000\\ & \text{(Bill collected on due date)}& & & \end{array}$