Question

On Feb. 01, 2017, Mohan sold goods worth ₹ 25,000 to Naresh and drew upon him a bill payable after 90 days. Naresh accepted the bill and Mohan endorsed the bill immediately in favour of his creditor Raja in full settlement of his account of ₹ 25,300. One week before the maturity of the bill Naresh requested Mohan to cancel the bill and draw upon him a new bill including interest of ₹ 400. Mohan agreed to it. Mohan immediately took the bill from Raja by making the payment to him and then drew upon Naresh a new bill for 30 days which was duly met by Naresh on due date.
Pass necessary entries in the books of Mohan.

Answer 1

Books of Mohan Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
2017
Feb. 01	Naresh	Dr.		25,000
	To Sales A/c				25,000
	(Goods sold to Naresh)
Feb. 01	Bills Receivable A/c	Dr.		25,000
	To Naresh				25,000
	(Naresh accepted the bill)
Feb. 01	Raja	Dr.		25,300
	To Bills Receivable A/c				25,000
	To Discount Received A/c				300
	(Bills receivable endorsed in favour of Raja)
Apr. 27	Naresh	Dr.		25,000
	To Raja				25,000
	(Bills receivable cancelled)
Apr. 27	Raja	Dr.		25,000
	To Cash A/c				25,000
	(Cash paid to Raja)
Apr. 27	Naresh	Dr.		400
	To Interest A/c				400
	(Interest due to be received)
Apr. 27	Bills Receivable A/c	Dr.		25,400
	To Naresh				25,400
	(Naresh accepted the new bill)
May 30	Cash A/c	Dr.		25,400
	To Bills Receivable A/c				25,400
	(Bill honoured on due date)