Question

On 2nd February, 2016, A purchased from B goods for Rs. 17,500. A paid Rs. 2,500 immediately and for the balance gave a promissory note to B, payable after 60 days. B immediately endorsed the promissory note in favour of his creditor C for the full settlement of a debt of Rs. 15,400. On the due date of the bill, C presented the bill to A, which the latter dishonoured and C paid Rs. 50 as noting charges. On the same date, C informed B about the dishonour of the bill and B immediately settled his debt to C by cheque for Rs. 15,050 which includes noting charges. A settled B's claim by cheque for the same amount. Record the necessary journal entries in the books of B.

Answer 1

In the Books of B
JOURNAL
$\begin{array}{ccccc}\text{Date}& \text{Particulars}& L.F.& \text{Amt. (Dr.)}& \text{Amt. (Cr.)}\\ 2016& & & & \\ \text{Feb 2}& \text{A's A/c}\text{Dr.}& & 17,500& \\ & \text{To Sales A/c}& & & 17,500\\ & \underset{–}{\text{(Goods sold to Verma)}}& & & \\ \text{Feb 2}& \text{Bank A/c}\text{Dr.}& & 2,500& \\ & \text{Bills Receivable A/c}\text{Dr.}& & 15,000& \\ & \text{To A's A/c}& & & 17,500\\ & \text{(Received Rs. 2,500 in cash and a promissory note for the}& & & \\ & \underset{–}{\text{balance)}}& & & \\ \text{Feb 2}& \text{C's A/c}\text{Dr.}& & 15,400& \\ & \text{To Bills Receivable A/c}& & & 15,000\\ & \text{To Discount Received A/c}& & & 400\\ & \text{(Promissory note endorsed to Gupta in full settlement of}& & & \\ & \underset{–}{\text{Rs. 15,400)}}& & & \\ \text{Apr 6}& \text{A's A/c}\text{Dr.}& & 15,050& \\ & \text{To C's A/c}(15,000+50)& & & 15,050\\ & \text{(Promissory note dishonoured by A and noting charges paid}& & & \\ & \underset{–}{\text{by C of Rs. 50)}}& & & \\ \text{Apr 6}& \text{C's A/c}\text{Dr.}& & 15,050& \\ & \text{To Bank A/c}& & & 15,050\\ & \underset{–}{\text{(Amount paid to C)}}& & & \\ \text{Apr 6}& \text{Bank A/c}\text{Dr.}& & 15,050& \\ & \text{To A's A/c}& & & 15,050\\ & \text{(Amount received from A)}& & & \end{array}$

Note: Discount of Rs. 400 has not been debited in the entry for dishonour because full payment has been made to C on the date of dishonour itself.