Question

On Feb. 02, 2017, Verma purchased from Sharma goods for Rs 17,500. Verma paid Rs 2,500 immediately and for the balance gave a promissory note to Sharma payable after 60 days. Sharma immediately endorsed the promissory note in favour of his creditor.

Gupta for the full settlement of a debt of Rs 15,400. On the due date of the bill Gupta presented the bill to Verma which the latter dishonoured and Gupta paid Rs 5,000 noting charges. On the same date Gupta informed Sharma about the dishonour of the bill. Sharma settled his debt to Gupta by cheque for Rs 15,500 which includes noting charges and interest. Verma settled Sharma.s claim by cheque for the same amount.

Record the necessary journal entries is the books of Sharma, Gupta and Verma for the above transaction and prepare Verma.s and Gupta.s accounts in the books of Sharma. Sharma.s account in the books of Verma. And also Sharma's account in the books of Gupta.

Answer 1

Books of Sharma Journal
Date		Particulars				L.F.	Debit Amount Rs	Credit Amount Rs
2017
Feb.02	Verma			Dr.			17,500
			To Sales A/c					17,500
	(Goods sold to Verma)
Feb.02	Cash A/c			Dr.			2,500
	Bills Receivable A/c			Dr.			15,000
			To Verma					17,500
	(Cash Rs 2,500 and Promissory Note Rs 15,000 received from Verma for 60 days)
Feb.02	Gupta A/c				Dr.		15,400
			To Bills Receivable A/c					15,000
			To Discount Received A/c					400
	(Promissory Note endorsed to Gupta in full settlement of amount due to him)
Apr.05	Discount Received A/c				Dr.		400
	Verma				Dr.		15,050
			To Gupta					15,450
	(Promissory Note issued by Verma dishonoured and Gupta paid Rs 50 as noting charges)
	Note: In this question Rs 5,000 is given as noting charges, there is mistake. Here Rs 50 has been taken as noting charges instead of Rs 5,000).
Apr.06	Interest A/c				Dr.		50
			To Gupta					50
	(Interest of Rs 50 debited to Gupta, on account of dishonour of Promissory Note)
Apr.06	Gupta				Dr.		15,500
			To Bank A/c					15,500
	(Gupta's A/c settled)
Apr.06	Bank A/c				Dr.		15,050
			To Verma					15,050
	(Cheque received from Verma for the amount due from him)

Ledger Verma's Account
Dr.							Cr.
Date	Particulars	J.F.	Amount Rs	Date	Particulars	J.F.	Amount Rs
2017				2017
Feb.02	Sales		17,500	Feb.02	Cash		2,500
Apr.06	Gupta		15,050	Feb.02	Bills Receivable		15,000
				Apr.06	Bank		15,050
			32,550				32,550

Gupta's Account
Dr.							Cr.
Date	Particulars	J.F.	Amount Rs	Date	Particulars	J.F.	Amount Rs
2017				2017
Feb.02	B/R		15,000	Apr.01	Balance b/d		15,400
Feb.02	Discount Received		400	Apr.06	Verma		15,050
Feb.02	Bank		15,500	Apr.06	Discount Reserved		400
				Apr.06	Interest		50
			30,900				30,900

Books of Verma Journal
Date		Particulars					L.F.	Debit Amount Rs	Credit Amount Rs
2017
Feb.02	Purchases A/c			Dr.				17,500
			To Sharma						17,500
	(Goods bought from Sharma)
Feb.02	Sharma					Dr.		17,500
		To Bills Payable A/c							15,000
		To Cash A/c							2,500
	(Cash Rs 2,500 paid and Promissory Note made for the balance)
Apr.06	Bills Payable A/c					Dr.		15,000
	Noting Charges A/c					Dr.		50
		To Sharma							15,050
	(Promissory Note dishonoured on maturity)
Apr.06	Sharma				Dr.			15,050
		To Bank A/c							15,050
	(Payment made to Sharma through cheque)

Ledger Sharma's Account
Dr.							Cr.
Date	Particulars	J.F.	Amount Rs	Date	Particulars	J.F.	Amount Rs
2017				2017
Feb.02	Cash		2,500	Feb.02	Purchases		17,500
Feb.02	Bills Payable		15,000	Apr.06	Bills Payable		15,000
Apr.06	Bank		50	Apr.06	Noting Charges		50
			30,900				30,900

Books of Gupta Journal
Date		Particulars				L.F.	Debit Amount Rs	Credit Amount Rs
2017
Feb.02	Bills Receivable A/c			Dr.			15,000
	Discount Allowed A/c			Dr.			400
			To Sharma					15,400
	(Promissory Note Rs 15,000 received from Sharma in full settlement for 60 days)
Apr.06	Sharma				Dr.		15,450
		To Bills Receivable A/c						15,000
		To Discount Allowed A/c						400
		To Bank A/c						50
	(Promissory Note received from Sharma, dishonoured)
Apr.06	Sharma				Dr.		50
		To Interest A/c						50
	(Interest Rs 50 credited on account of Promissory Note dishonoured)
Apr.06	Bank A/c			Dr.			15,500
		To Sharma						15,500
	(Cheque received from Sharma)

Ledger Sharma's Account
Dr.							Cr.
Date	Particulars	J.F.	Amount Rs	Date	Particulars	J.F.	Amount Rs
2017				2017
Feb.01	Balance b/d		15,400	Feb.02	Bills Receivable		15,000
Apr.06	Bills Receivable		15,000	Feb.02	Discount Allowed		400
Apr.06	Discount Allowed		4,000	Apr.06	Bank		15,500
Apr.06	Bank		50
Apr.06	Interest		50
			30,900				30,900