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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.
 


Solution

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
               

Accountancy
DK Goel (2019)
All

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