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Question

On 1st July, 2019, 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.
Pass the necessary Journal entries in the books of A and B.

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Solution

Books of A

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2019

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

(₹)

Credit

Amount

(₹)

2019

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)


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