Question

On January 1, 2011, Rao sold goods Rs. 10,000 to Reddy. Half of the payment was made immediately and for the remaining half, Rao drew a bill of exchange upon Reddy payable after 30 days. Reddy accepted the bill and returned it to Rao. On the due date, Rao presented the bill to Reddy and received the payment. Journalise the above transactions in the books of Rao and prepare Rao's account in the books of Reddy.

Answer 1

In the Books of Rao
Journal Entries

$\begin{array}{ccccccc}\text{Date}& \text{Particulars}& & \text{L.F.}& \text{Amt. (Dr.)}& \text{Amt. (Cr.)}& \\ \text{2011}& & & & & & \\ \text{Jan 1}& \text{Reddy}& \text{Dr.}& & \text{10,000}& & \\ & \text{To Sales A/c}& & & & \text{10,000}& \\ & \text{(Goods sold to Reddy on credit)}& & & & & \\ & \underset{–}{}& & & & & \\ \text{Jan 1}& \text{Cash A/c}& \text{Dr.}& & \text{5,000}& & \\ & \text{Bills Receivable A/c}& \text{Dr.}& & \text{5,000}& & \\ & \text{To Reddy's A/c}& & & & \text{10,000}& \\ & \text{(Half of the amount of credit sales and}& & & & & \\ & \text{acceptance for remaining half amount}& & & & & \\ & \text{received)}& & & & & \\ & \underset{–}{}& & & & & \\ \text{Feb 3}& \text{Cash A/c}& \text{Dr.}& & \text{5,000}& & \\ & \text{To Bills Receivable A/c}& & & & \text{5,000}& \\ & \text{(Cash received on due date)}& & & & & \end{array}$

In the Books of Reddy
Rao's Account

$\begin{array}{cccccccc}\text{Date}& \text{Particulars}& \text{J.F.}& \text{Amt. (Rs)}& \text{Date}& \text{Particulars}& \text{J.F.}& \text{Amt. (Rs)}\\ \text{2011}& & & & \text{2011}& & & \\ \text{Jan 1}& \text{Cash A/c}& & \text{5,000}& \text{Jan 1}& \text{Purchase A/c}& & \text{10,000}\\ \text{Jan 1}& \text{Bills}& & \text{5,000}& & & & \\ & \text{Payable A/c}& & & & & & \\ & & & \underset{–}{\overline{\text{10,000}}}& & & & \underset{–}{\overline{\text{10,000}}}\end{array}$