Question

On 1st July, 2017, A drew a bill for ₹ 5,000 on B payable after 3 months. A discounted it with the Bank for ₹ 4,850. On maturity B failed to pay the amount of his acceptance and the bank had to pay ₹ 50 as noting charges.
Draw up the necessary Journal entries in the books of A and B.

Answer 1

Books of A
Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2017
Jul.01	Bills Receivable A/c	Dr.		5,000
	To B				5,000
	(B’s acceptance was received)
Jul.01	Bank A/c	Dr.		4,850
	Discount Charges A/c	Dr.		150
	To Bills Receivable A/c				5,000
	(B’s acceptance discounted with bank)
Oct.04	B	Dr.		5,050
	To Bank A/c				5,050
	(B’s acceptance became dishonoured, bank paid Noting Charges Rs 50)

Books of B
Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2017
Jul.01	A	Dr.		5,000
	To Bills Payable A/c				5,000
	(Bill drawn by A was accepted)
Oct.04	Bills Payable A/c	Dr.		5,000
	Noting Charges A/c	Dr.		50
	To A				5,050
	(Bills Payable dishonoured)