On Jan. 01, 2016 Arun sold goods for Rs 30,000 to Sunil. 50% of the payment was made immediately by Sunil on which Arun allowed a cash discount of 2%. For the balance Sunil drew a promissory note in favour of Arun payable after 20 days. Since, the date of maturity of bill was a public holiday, Arun presented the bill on a day, as per the provisions of Negotiable Instrument Act which was met by Sunil. State the date on which the bill was presented by Arun for payment and Journalise the above transactions in the books of Arun and Sunil.

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Solution

Journal Entries in the Books of Arun

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

2016

Jan.01

Sunil

Dr.

30,000

To Sales A/c

30,000

(Goods sold to Sunil)

Jan.01

Cash A/c

Dr.

14,700

Discount Allowed A/c

Dr.

300

To Sunil

15,000

(Half of the amount due from Sunil was received and

allowed him 2% Cash Discount)

Jan.01

Bills Receivable A/c

Dr.

15,000

To Sunil

15,000

(Promissory note received for 20 days from Sunil

for balance amount due from Sunil)

Jan.23

Cash A/c

Dr.

15,000

To Bills Receivable A/c

15,000

(Cash received from Sunil for B/R one day before

maturity, as per negotiable instrument act, if the

date of maturity is holiday, negotiable instrument

will be met one day before maturity)

Note: Date of maturity of the promissory note is Jan. 24, 2016, on account of holiday, it will be presented one day earlier that is on Jan. 23, 2016.

Journal Entries in the Book of Sunil

Date

Particulars

L.F.

Debit Amount Rs

Credit Amount Rs

2016

Jan.01

Purchases A/c

Dr.

30,000

To Arun

30,000

(Goods purchased from Arun)

Jan.01

Arun

Dr.

15,000

To Cash A/c

14,700

To Discount Received A/c

300

(Half amount due to Arun paid by cheque and 2% discount allowed by him)

Jan.01

Arun

Dr.

15,000

To Bills Payable A/c

15,000

(Promissory note issued in favour of Arun for twenty days)

Jan.23

Bills Payable A/c

Dr.

15,000

To Cash A/c

15,000

(Promissory note met one day before the maturity day)

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Journal Entries in the Books of Arun
Date			Particulars			L.F.	Debit Amount Rs	Credit Amount Rs
2016
Jan.01	Sunil			Dr.			30,000
		To Sales A/c						30,000
	(Goods sold to Sunil)

Jan.01	Cash A/c			Dr.			14,700
	Discount Allowed A/c			Dr.			300
		To Sunil						15,000
	(Half of the amount due from Sunil was received and allowed him 2% Cash Discount)

Jan.01	Bills Receivable A/c			Dr.			15,000
		To Sunil						15,000
	(Promissory note received for 20 days from Sunil for balance amount due from Sunil)

Jan.23	Cash A/c				Dr.		15,000
		To Bills Receivable A/c						15,000
	(Cash received from Sunil for B/R one day before maturity, as per negotiable instrument act, if the date of maturity is holiday, negotiable instrument will be met one day before maturity)

Journal Entries in the Book of Sunil
Date			Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2016
Jan.01	Purchases A/c			Dr.		30,000
		To Arun					30,000
	(Goods purchased from Arun)

Jan.01	Arun			Dr.		15,000
		To Cash A/c					14,700
		To Discount Received A/c					300
	(Half amount due to Arun paid by cheque and 2% discount allowed by him)

Jan.01	Arun			Dr.		15,000
		To Bills Payable A/c					15,000
	(Promissory note issued in favour of Arun for twenty days)

Jan.23	Bills Payable A/c			Dr.		15,000
		To Cash A/c					15,000
	(Promissory note met one day before the maturity day)