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Question

On January 1, 2011, Harsh accepted a month bill for Rs. 10,000 drawn on him by tanu for latter's benefit. Tanu discounted the bill on same day at the rate of 8% per annum. On the due date Tanu sent a cheque to Harsh for honour the bill. Harsh duly honoured his acceptance.
Record the Journal entries in the books of Tanu and Harsh.

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Solution

In the Books of Tanu
Journal Entries
DateParticularsLFAmt.(Dr)Amt.(Cr)
Jan 1Bills Receivable A/c Dr
To Harsh
(Being acceptance received from Harsh for a month)
10,00010,000
Jan 1Bank A/c Dr
Discount A/c Dr
To Bills Receivable A/c
(Being bill discounted with the bank at the rate of 8% per annum
9,933
67
10,000
Feb 4Harsh Dr
To Bank A/c
(Being a cheque sent to Harsh on due date for paying off accommodation bill)
10,00010,000

In the Books of Harsh
Journal Entries
DateParticularsLFAmt.(Dr)Amt.(Cr)
2011
Jan 1Tanu Dr
To Bills Payable A/c
(Being acceptance received for one month)
10,00010,000
Feb 4Bank A/c Dr
To Tanu
(Being cheque received from Tanu on due date)
10,00010,000
Feb 4Bills Payable A/c Dr
To Bank A/c
(Being acceptance paid on maturity)
10,00010,000

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