Question

P draws on Q three bills of exchange for Rs. 15,000, Rs. 12,000 and Rs. 9,000 respectively for goods sold to him on 1st February, 2016. These bills were for 1 month, 2 months and 3 months, respectively. The first bill was endorsed to his creditor R. The second bill was discounted with his bank on 4th February, 2016 @ 12% per annum and the third bill was sent to his bank for collection on 30th April. On the due dates, all the bills were duly met by Q. The bank sent the collection advice for the third bill after deducting Rs. 75 as collection charges. Pass the journal entries in the books of P and Q.

Answer 1

In the Books of P
JOURNAL
$\begin{array}{ccccc}\text{Date}& \text{Particulars}& L.F.& \text{Amt. (Dr.)}& \text{Amt. (Cr.)}\\ 2016& & & & \\ \text{Feb 1}& \text{Q's A/c}\text{Dr.}& & 36,000& \\ & \text{To Sales A/c}& & & 36,000\\ & \underset{–}{\text{(Goods sold on credit)}}& & & \\ \text{Feb 1}& \text{Bills Receivable (No.1) A/c}\text{Dr.}& & 15,000& \\ & \text{Bills Receivable (No.2) A/c}\text{Dr.}& & 12,000& \\ & \text{Bills Receivable (No.3) A/c}\text{Dr.}& & 9,000& \\ & \text{To Q's A/c}& & & 36,000\\ & \underset{–}{\text{(Acceptances received)}}& & & \\ \text{Feb 1}& \text{R's A/c}\text{Dr.}& & 15,000& \\ & \text{To Bills Receivable (No.1) A/c}& & & 15,000\\ & \underset{–}{\text{(Bill endorsed in favour of creditor, R)}}& & & \\ \text{Feb 4}& \text{Bank A/c}\text{Dr.}& & 11,760& \\ & \text{Discounting Charges A/c}\text{Dr.}& & 240& \\ & \text{To Bills Receivable (No.2) A/c}& & & 12,000\\ & \underset{–}{\text{(Bill discounted with the bank)}}& & & \\ \text{Apr 30}& \text{Bill Sent for collection A/c}\text{Dr.}& & 9,000& \\ & \text{To Bills Receivable (No.3) A/c}& & & 9,000\\ & \underset{–}{\text{(Bill sent to the bank for collection)}}& & & \\ \text{May 4}& \text{Bank A/c}\text{Dr.}& & 8,925& \\ & \text{Bank Charges A/c}\text{Dr.}& & 75& \\ & \text{To Bill Sent for Collection A/c}& & & 9,000\\ & \text{(Bill collected by the bank and collection charges}& & & \\ & \text{deducted)}& & & \end{array}$

Working Note :
Calculation of Discount = $12,000\times \frac{12}{100}\times \frac{2}{12}=Rs.240$

In the Books of Q
JOURNAL
$$\begin{array}{cccccc}\text{Date}& \text{Particulars}& & \text{L.F.}& \text{Amt. (Dr.)}& \text{Amt. (Cr.)}\\ 2016& & & & & \\ \text{Feb 1}& \text{Purchases A/C}& \text{Dr.}& & 36,000& \\ & \text{To P's A/c}& & & & 36,000\\ & \underset{–}{\text{(Goods purchased on credit)}}& & & & \\ \text{Feb 1}& \text{P's A/c}& \text{Dr.}& & 36,000& \\ & \text{To Bills Payable (No. 1) A/c}& & & & 15,000\\ & \text{To Bills Payable (No. 2) A/c}& & & & 12,000\\ & \text{To Bills Payable (No. 3) A/c}& & & & 9,000\\ & \underset{–}{\text{(Acceptances given)}}& & & & \\ \text{Mar 4}& \text{Bills Payable (No. 1 ) A/c}& \text{Dr.}& & 15,000& \\ & \text{To Cash A/c}& & & & 15,000\\ & \underset{–}{\text{(Bill met on maturity)}}& & & & \\ \text{Apr 4}& \text{Bills Payable (No. 2) A/c}& \text{Dr}& & 12,000& \\ & \text{To Cash A/c}& & & & 12,000\\ & \underset{–}{\text{(Bill met on maturity)}}& & & & \\ \text{May 4}& \text{Bills Payable (No. 3) A/c}& & & 9,000& \\ & \text{To Cash A/c}& & & & 9,000\\ & \underset{–}{\text{(Bill met on maturity)}}& & & & \end{array}$$