Question

On 1^st Sept., 2010 Badrinath drew a bill of Rs 20,000 on Dinanath at 4 months. The bill was duly accepted by Dinanath. On 5^th Sept., 2010 Badrinath endorsed the bill in favour of Somnath. However on 1^st January, 2012 Dinanath approached to Badrinath and requested bill be renewed for a further period of 3 months at 15% p.a. Badrinath agreed and paid necessary money to Somnath. Before one month of the due date of the new bill Dinanath retired his acceptance @ 10% p.a.

Pass journal entries in the books Badrinath and Dinanath.

Answer 1

Books of Badrinath
Journal Entry
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2010
Sept.01	Bills Receivable A/c	Dr.		20,000
	To Dinanath				20,000
	(Bill drawn and accepted)
Sept.05	Somnath	Dr.		20,000
	To Bills Receivable A/c				20,000
	(Bill endorsed to Somnath)
2011
Jan.01	Dinnanth	Dr.		20,000
	To Badrinath				20,000
	(Bill cancelled)
Jan.01	Badrinath	Dr.		750
	To Interest A/c				750
	(Interest charges due on Rs 20,000 @ 15% per annum for 3 moths)
Jan.01	Bills Receivable A/c	Dr.		20,750
	To Badrinath				20,750
	(New bill was drawn and accepted including interest of Rs 750)
Feb.01	Cash/Bank A/c	Dr.		20,577
	Rebate A/c	Dr.		173
	To Bills Receivable A/c				20,750
	(Bill retired under the rebate of 10% per annum, one month before the due date)

Books of Dinanath
Journal Entry
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2010
Sept.01	Badrinath	Dr.		20,000
	To Bills Payable A/c				20,000
	(Bill accepted)
Jan.01	Bills Payable A/c	Dr.		20,000
	To Badrinath				20,000
	(Bill cancelled)
Jan.01	Interest A/c	Dr.		750
	To Badrinath				750
	(Interest charges due on Rs 20,000 @ 15% for 3 months)
Jan.01	Badrinath	Dr.		20,750
	To Bills Payable A/c				20,750
	(Bill accepted with interest charges of Rs 750)
Feb.01	Bills Payable A/c	Dr.		20,750
	To Cash/Bank A/c				20,577
	To Rebate A/c				173
	(Bill retired under the rebate of 10% per annum, one month before the due date)

Note: As per the book, Dinanath approached Badrinath for the renewal of bill on January 01,2012 but it should be on January 01,2011.