Question

On January 1, 2011, Neha sold goods for Rs. 20,000 to Muskan and drew upon her a bill of exchange payable after two months. One month before the maturity of the bill Muskan approached Neha to accept the payment against the bill at a rebate at the rate of 12% per annum. Neha agreed to the request of Muskan and Muskan retired the bill under the agreed rate of rebate. Journalise the above transaction in the books of Neha and Muskan.

Answer 1

In the Books of Neha
Journal Entries

$$\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F.}& \text{Amt. (Dr.)}& \text{Amt. (Cr.)}\\ \text{2011}& & & & & \\ \text{Jan 1}& \text{Muskan's A/c}& \text{Dr.}& & \text{20,000}& \\ & \text{To Sales}& & & & \text{20,000}\\ & \text{(Goods sold to Muskan)}& & & & \\ & \underset{–}{}& & & & \\ \text{Jan 1}& \text{Bills Receivable A/c}& \text{Dr.}& & \text{20,000}& \\ & \text{To Muskan's A/c}& & & & \text{20,000}\\ & \text{(Acceptance received})& & & & \\ & \underset{–}{}& & & & \\ \text{Feb 4}& \text{Cash A/c}& \text{Dr.}& & \text{19,800}& \\ & \text{Rebate A/c}& \text{Dr.}& & \text{200}& \\ & \text{To Bills Receivable A/c}& & & & 20,000\\ & \text{(Muskan's acceptance retired and rebate allowed to her)}& & & & \end{array}$$
In The Books of Muskan
Journal Entries
$$\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F.}& \text{Amt. (Dr.)}& \text{Amt. (Cr.)}\\ \text{2011}& & & & & \\ \text{Jan 1}& \text{Purchases A/c}& \text{Dr.}& & \text{20,000}& \\ & \text{To Neha}& & & & \text{20,000}\\ & \text{(Goods bought from Neha)}& & & & \\ & \underset{–}{}& & & & \\ \text{Jan 1}& \text{Neha's A/c}& \text{Dr.}& & \text{20,000}& \\ & \text{To Bills Payable A/c}& & & & \text{20,000}\\ & \text{(Bill drawn by Neha payable after 2 months)}& & & & \\ & \underset{–}{}& & & & \\ \text{Feb 4}& \text{Bills Payable A/c}& \text{Dr.}& & \text{20,000}& \\ & \text{To Cash A/c}& & & & 19,800\\ & \text{To Rebate A/c}& & & & 200\\ & \text{(Acceptance retired under rebate)}& & & & \end{array}$$