Question

PRACTICAL PROBLEMS

Hitesh sold goods for Rs 4,500 to Ashok on 1.1.2010 and drew upon him a bill of exchange payable 2 months after sight. Ashok accepted the bill and returned the same to Hitesh. On the due date the bill was met by Ashok.

Record the necessary Journal entries in the books of Hitesh and also prepare Ashok account in his books.

1. When the bill was retained by Hitesh till the date of its maturity.

2. When Hitesh immediately discounted the bill @ 15% p.a. with his bank.

3. When three days before its maturity, the bill was sent by Hitesh to his bank for collection.

4. When the bill was endorsed immediately by Hitesh in favour of his creditor Venkat.

Answer 1

Case-I

Books of Hitesh
Journal Entry
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2010
Jan.01	Ashok	Dr.		4,500
	To Sales A/c				4,500
	(Goods sold to Ashok)
Jan.01	Bills Receivable A/c	Dr.		4,500
	To Ashok				4,500
	(Bill accepted by Ashok)
Mar.04	Bank A/c	Dr.		4,500
	To Bills Receivable A/c				4,500
	(Bill honoured on maturity)

Case-II

Books of Hitesh
Journal Entry
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2010
Jan.01	Ashok	Dr.		4,500
	To Sales A/c				4,500
	(Goods sold to Ashok)
Jan.01	Bills Receivable A/c	Dr.		4,500
	To Ashok				4,500
	(Bill accepted by Ashok)
Jan.01	Bank A/c	Dr.		4,387
	Discount Charges A/c	Dr.		113
	To Bills Receivable A/c				4,500
	(Bill discounted with bank @ 15% per annum)

Case-III

Books of Hitesh
Journal Entry
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2010
Jan.01	Ashok	Dr.		4,500
	To Sales A/c				4,500
	(Goods sold to Ashok)
Jan.01	Bills Receivable A/c	Dr.		4,500
	To Ashok				4,500
	(Bill accepted by Ashok)
Mar.01	Bill Sent for Collection A/c	Dr.		4,500
	To Bills Receivable A/c				4,500
	(Bill sent for Collection to Bank, 3 days before maturity)
Mar.04	Bank A/c	Dr.		4,500
	To Bill Sent for Collection A/c				4,500
	(Bill sent for collection to bank, honoured on maturity)

Case-IV

Books of Hitesh
Journal Entry
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2010
Jan.01	Ashok	Dr.		4,500
	To Sales A/c				4,500
	(Goods sold to Ashok)
Jan.01	Bills Receivable A/c	Dr.		4,500
	To Ashok				4,500
	(Bill accepted by Ashok)
Jan.01	Venkat	Dr.		4,500
	To Bills Receivable A/c				4,500
	(Bill endorsed to Venkat, a creditor)

Ashok’s Account
Dr.	Cr.
Date		Particulars	J.F.	Amount (Rs)	Date	Particulars	J.F.	Amount (Rs)
2010					2010
Jan.01		Sales A/c		4,500	Jan.01	Bills Receivable A/c		4,500
				4,500				4,500

Note: In all the four cases, Ashok’s A/c will be the same.