Question

On Jan 01, 2017 Vibha sold goods worth Rs 18,000 to Sudha and drew upon the latter a bill of exchange for the same amount payable after two months. Sudha accepted Vibha’s draft and returned the same to Vibha after acceptance. Vibha endorsed the bill immediately in favour of her creditor Geeta. Five days before the maturity of the bill Sudha requested Vibha to cancel the bill since she was short of funds. She further requested to draw a new bill upon her including interest of Rs 200. Vibha accepted Sudha’s request. Vibha took the bill from Geeta by making the payment to her in cash and cancelled the same. Then she drew a new bill upon Sudha as agreed. The new bill was payable after one month. The new bill was duly met by Sudha on maturity. Record the necessary journal entries in the books of Vibha.

Answer 1

Books of Vibha Journal
Date		Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2017
Jan.01	Sudha		Dr.		18,000
		To Sales A/c				18,000
	(Goods sold to Sudha)
Jan.01	Bills Receivable A/c		Dr.		18,000
		To Sudha				18,000
	(Sudha's acceptance received)
Jan.01	Geeta		Dr.		18,000
		To Bills Receivable A/c				18,000
	(Sudha's acceptance endorsed in favour of Geeta)
Feb.27	Sudha		Dr.		18,000
		To Geeta				18,000
	(Sudha cancelled the bill five days before the maturity)
Feb.27	Geeta		Dr.		18,000
		To Cash A/c				18,000
	(Cash paid to Geeta)
Feb.27	Sudha				200
		To Interest A/c				200
	(Interest credited to Sudha on account of cancelling the bill )
Feb.27	Bills Receivable A/c		Dr.		18,200
		To Sudha				18,200
	(New bill received from Sudha)
Mar.02	Cash A/c		Dr.		18,200
		To Sudha				18,200
	(Shudha’s acceptance met on due date)