Question

PRACTICAL PROBLEMS

On 1^st April, 2011 Umakant draws a bill for Rs 25,000 on Laxmikant for 4 months period. The bill is accepted and returned to Umakant. On the same date Umakant discounted the bill with his bank @ 12% p.a.

Before due date Laxmikant finds himself unable the bill, hence required Umakant to renew the bill for further period of 2 months. Umakant agreed and he took the bill back from bank and received new acceptance for Rs 26,000 including interest. This new bill is duly honoured by Laxmikant on due date.

Write Journal of Umakant and Laxmikant for the above bill transactions.

Answer 1

Books of Umakant
Journal Entry
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2011
Apr.01	Bills Receivable A/c	Dr.		25,000
	To Laxmikant				25,000
	(Bill drawn and accepted)
Apr.01	Bank A/c	Dr.		24,000
	Discount Charges A/c	Dr.		1,000
	To Bills Receivable A/c				25,000
	(Bill discounted with Bank @ 12% per annum before 4 months)
Aug.04	Laxmikant	Dr.		25,000
	To Bank A/c				25,000
	(Bill cancelled)
Aug.04	Laxmikant	Dr.		1,000
	To Interest A/c				1,000
	(Interest charges due)
Aug.04	Bills Receivable A/c	Dr.		26,000
	To Laxmikant				26,000
	(New bill was drawn and accepted including interest of Rs 1,000)
Oct.07	Bank A/c	Dr.		26,000
	To Bills Receivable A/c				26,000
	(Bill honoured on due date)

Books of Laxmikant
Journal Entry
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2011
Apr.01	Umakant	Dr.		25,000
	To Bills Payable A/c				25,000
	(Bills accepted)
Aug.04	Bills Payable A/c	Dr.		25,000
	To Umakant				25,000
	(Bill cancelled)
Aug.04	Interest A/c	Dr.		1,000
	To Umakant				1,000
	(Interest charges due)
Aug.04	Umakant	Dr.		26,000
	To Bills Payable A/c				26,000
	(New bill accepted including interest of Rs 1,000)
Oct.07	Bills Payable A/c	Dr.		26,000
	To Bank A/c				26,000
	(Amount of bill paid on due date)