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Question

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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