Question

On March 4, 2017, A purchased from B goods for ₹ 50,000. A paid 40% immediately and for the balance gave a promissory note to B payable after 30 days. B immediately endorsed the promissory note in favour of his creditor C for the full settlement of a debt of ₹ 31,000. On the due date the bill was dishonoured and C paid ₹ 100 as noting charges. On the same date C informed B about the dishonour of the bill. B settled his debt to C by cheque for ₹ 30,100 which includes noting charges. A settled B's claim by cheque for the same amount.
Record the necessary journal entries in the books of A, B and C for the above transactions and prepare A's and C's accounts in the books of B, B's account in the books of A and also B's account in the books of C.

Answer 1

Books of B Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
2017
Mar. 04	A	Dr.		50,000
	To Sales A/c				50,000
	(Goods sold to A)
Mar. 04	Cash A/c	Dr.		20,000
	Bills Receivable A/c	Dr.		30,000
	To A				50,000
	(40% of the amount received in cash and for the remaining amount a promissory note has been accepted by A)
Mar. 04	C	Dr.		31,000
	To Bills Receivable A/c				30,000
	To Discount Received A/c				1,000
	(Promissory note endorsed in favour of C)
Apr. 06	A	Dr.		30,100
	To C				30,100
	(Promissory note dishonoured on due date and noting charges are paid by C)
Apr. 06	C	Dr.		31,100
	To Bank A/c				30,100
	(Cheque paid to C)
Apr. 06	Bank A/c	Dr.		30,100
	To A				30,100
	(Cheque received from A)

A’s Account
Dr.								Cr.
Date		Particulars	J.F.	Amount (Rs)	Date	Particulars	J.F.	Amount (Rs)
2017					2017
Mar. 04		Sales A/c		50,000	Mar. 04	Cash A/c		20,000
Apr. 06		C		30,100	Mar. 04	Bills Receivable A/c		30,000
					Apr. 06	Bank A/c		30,100
				80,100				80,100

C’s Account
Dr.									Cr.
Date		Particulars	J.F.	Amount (Rs)	Date	Particulars	J.F.	Amount (Rs)
2017					2017
Mar. 04		Bills Receivable A/c		30,000	Mar. 04	Balance b/d		31,000
Mar. 04		Discount Received A/c		1,000	Apr. 06	A		30,100
Apr. 06		Bank A/c		30,100
				61,100				61,100

Books of A Journal

Date

Particulars

L.F.

Debit Amount (Rs)

Credit Amount (Rs)

2017

Mar. 04

Purchases A/c

Dr.

50,000

To B

50,000

(Goods purchased from B)

Mar. 04

B

Dr.

50,000

To Cash A/c

20,000

To Bills Payable A/c

30,000

(40% of the amount paid in cash and for the remaining amount a promissory note has been accepted)

Apr. 06

Bills Payable A/c

Dr.

30,000

Noting Charges A/c

Dr.

100

To B

30,100

(Promissory note dishonoured on due date and noting charges to be paid)

Apr. 06

B

Dr.

30,100

To Bank A/c

30,100

(Cheque paid to B)

B’s Account
Dr.								Cr.
Date		Particulars	J.F.	Amount (Rs)	Date	Particulars	J.F.		Amount (Rs)
2017					2017
Mar. 04		Cash A/c		20,000	Mar. 04	Purchases A/c			50,000
Mar. 04		Bills Payable A/c		30,000	Apr. 06	Bills Payable A/c			30,000
Apr. 06		Bank A/c		30,100	Apr. 06	Noting Charges A/c			100
				80,100					80,100

Books of C Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
2017
Mar. 04	Bills Receivable A/c	Dr.		30,000
	Discount Allowed A/c	Dr.		1,000
	To B				31,000
	(Promissory note received from B)
Apr. 06	B	Dr.		30,100
	To Bills Receivable A/c	Dr.			30,000
	To Cash A/c				100
	(Promissory note dishonoured on due date and noting charges paid)
Apr. 06	Bank A/c	Dr.		30,100
	To B				31,100
	(Cheque received from B)

B’s Account
Dr.									Cr.
Date		Particulars	J.F.	Amount (Rs)	Date	Particulars	J.F.	Amount (Rs)
2017					2017
Mar. 04		Balance b/d		31,000	Mar. 04	Bills Receivable A/c		30,000
Apr. 06		Bills Receivable A/c		30,000	Mar. 04	Discount Allowed A/c		1,000
Apr. 06		Cash A/c		100	Apr. 06	Bank A/c		30,100
				61,100				61,100