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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.


Solution

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
 
 
 
 
 
 
 
 

Accountancy
Financial Accounting- I - NCERT Solutions (2019)
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