Sharma owes Gupta Rs.420000. On 1st january , 2004.Sharma accepted a bill for 3 months for Rs. 400000 in full settlement.On the same date Gupta discounted the bill from his bank at 6% p.a. Before due date Sharma became bankrupt and Gupta recieved first and final dividend of 20 paise in a ruppee.
Give journal entries in the books of the drawer and the drawee. Also prepare drawee"s account in the books of drawer and drawer"s account in the books of drawee.

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Solution

Books of Gupta (Drawer)
Journal
Date
Particulars
L.F.
Debit
Amount
Credit
Amount
2004
Jan.01

Jan.01

Apr.04

Apr.04

Bills Receivable A/c
Discount A/c
To Sharma
(Three months Sharma’s acceptance received)

Bank A/c
Discount A/c
To Bills Receivable A/c
(Sharma’s acceptance discounted with the Bank)

Sharma
To Bank A/c
To Discount A/c
(Sharma’s acceptance dishonoured)

Cash A/c
Bad Debt A/c
To Sharma
(20% of the amount due from Sharma received and
remaining considered as Bad Debt)

Dr.

Dr.
Dr.

Dr.

Dr.
Dr.

4,00,000
20,000

3,94,000
6,000

4,20,000

84,000
3,36,000

4,20,000

4,00,000

4,00,000
20,000

4,20,000

Ledger
Sharma’s Account
Dr.
Cr.
Date
Particulars
J.F.
Amount
Rs
Date
Particulars
J.F.
Amount
Rs
2004
Jan.01
Apr.04
Apr.04

Balance b/d
Bank
Discount

4,20,000
4,00,000
20,000
2004
Jan.01
Jan.01
Apr.04
Apr.04

Bills Receivable
Discount
Cash
Bad Debt

4,00,000
20,000
84,000
3,36,000

8,40,000

8,40,000

Books of Sharma (Drawee)
Journal
Date
Particulars
L.F.
Debit
Amount
Credit
Amount
2004
Jan.01

Apr.01

Apr.04

Gupta
To Bills Payable A/c
To Discount A/c
(Bill drawn by Gupta accepted)

Discount A/c
Bills Payable A/c
To Gupta
(Bill drawn by Gupta dishonoured)

Gupta
To Cash A/c
To Deficiency A/c
(20% of the amount due to Gupta paid)

Dr.

Dr.
Dr.

Dr.

4,20,000

20,000
4,00,000

4,20,000

4,00,000
20,000

4,00,000

84,000
3,36,000

Ledger
Gupta’s Account
Dr.
Cr.
Date
Particular
J.F.
Amount
Rs
Date
Particulars
J.F.
Amount
Rs
2004
Jan.01
Jan.01
Apr.04
Apr.04

Bills Payable
Discount
Cash
Deficiency

4,00,000
20,000
84,000
3,36,000
2004
Jan.01
Apr.04
Apr.04

Balance b/d
Bills Payable
Discount

4,20,000
4,00,000
20,000

8,40,000

8,40,000

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Books of Gupta (Drawer) Journal
Date	Particulars		L.F.	Debit Amount	Credit Amount
2004 Jan.01 Jan.01 Apr.04 Apr.04	Bills Receivable A/c Discount A/c To Sharma (Three months Sharma’s acceptance received) Bank A/c Discount A/c To Bills Receivable A/c (Sharma’s acceptance discounted with the Bank) Sharma To Bank A/c To Discount A/c (Sharma’s acceptance dishonoured) Cash A/c Bad Debt A/c To Sharma (20% of the amount due from Sharma received and remaining considered as Bad Debt)	Dr. Dr. Dr. Dr. Dr. Dr.		4,00,000 20,000 3,94,000 6,000 4,20,000 84,000 3,36,000	4,20,000 4,00,000 4,00,000 20,000 4,20,000

Ledger Sharma’s Account
Dr.				Cr.
Date	Particulars	J.F.	Amount Rs	Date	Particulars	J.F.	Amount Rs
2004 Jan.01 Apr.04 Apr.04	Balance b/d Bank Discount		4,20,000 4,00,000 20,000	2004 Jan.01 Jan.01 Apr.04 Apr.04	Bills Receivable Discount Cash Bad Debt		4,00,000 20,000 84,000 3,36,000
			8,40,000				8,40,000

Books of Sharma (Drawee) Journal
Date	Particulars		L.F.	Debit Amount	Credit Amount
2004 Jan.01 Apr.01 Apr.04	Gupta To Bills Payable A/c To Discount A/c (Bill drawn by Gupta accepted) Discount A/c Bills Payable A/c To Gupta (Bill drawn by Gupta dishonoured) Gupta To Cash A/c To Deficiency A/c (20% of the amount due to Gupta paid)	Dr. Dr. Dr. Dr.		4,20,000 20,000 4,00,000 4,20,000	4,00,000 20,000 4,00,000 84,000 3,36,000

Ledger Gupta’s Account
Dr.				Cr.
Date	Particular	J.F.	Amount Rs	Date	Particulars	J.F.	Amount Rs
2004 Jan.01 Jan.01 Apr.04 Apr.04	Bills Payable Discount Cash Deficiency		4,00,000 20,000 84,000 3,36,000	2004 Jan.01 Apr.04 Apr.04	Balance b/d Bills Payable Discount		4,20,000 4,00,000 20,000
			8,40,000				8,40,000