Question

On January 1, 2017, Ajay sold goods to Balbir for ₹ 10,000 at a discount of 20%. On that date, Balbir accepted a bill, drawn on him by Ajay for ₹ 8,000 payable 3 months after sight. Having surplus funds, Balbir paid off the bill on 4th March, 2017 and was allowed a rebate of 18% per annum. Show Journal entries in the books of Ajay and Balbir.

Answer 1

Book of Ajay Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
2017
Jan. 01	Balbir	Dr.		8,000
	Discount Allowed A/c			2,000
	To Sales A/c				10,000
	(Goods sold to Balbir)
Jan. 01	Bills Receivable A/c	Dr.		8,000
	To Balbir				8,000
	(Bill accepted by Balbir)
Mar. 04	Cash A/c	Dr.		7,880
	Rebate A/c	Dr.		120
	To Bills Receivable A/c				8,000
	(Bill retired under the rebate of 18% p.a. for one month)

Books of Balbir Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
2017
Jan. 01	Purchases A/c	Dr.		8,000
	To Ajay				8,000
	(Goods purchased from Ajay)
Jan.01	Ajay	Dr.		8,000
	To Bills Payable A/c				8,000
	(Bill drawn by Ajay, accepted)
Mar. 04	Bills Payable A/c	Dr.		8,000
	To Cash A/c				7,880
	To Rebate A/c				120
	(Bill retired under the rebate of 18% p.a. for one month)

Working Note:

Calculation of amount of Rebate

$\mathrm{Amount}\mathrm{of}\mathrm{Rebate}=8,000\times \frac{18}{100}\times \frac{1}{12}=\mathrm{Rs}120$