Question

PRACTICAL PROBLEMS

On 1^st June, 2010 Narayan draws a bill for Rs 50,000 on Chunilal for 4 months period.
The bill is duly accepted and returned to Narayan. One month after the date. Narayan discounted the bill with bank @ 18% p.a.

Before due date Chunilal dishonoured his acceptance. Bank paid noting charges Rs 1,125. Narayan requested to renew the bill for further period of 2 months. Narayan agreed he took the bill back from bank and received new acceptance for 40% amount of the bill with full amount of noting charges and cheque for 60% balance plus interest @ 12% p.a.

Before the due date Chunilal declared insolvent and 30% of the amount due could be recovered from his private estate.

Write Journal of Narayan and Chunilal for the above bill transactions.

Answer 1

Books of Narayan
Journal Entry
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2010
Jun.01	Bills Receivable A/c	Dr.		50,000
	To Chunilal				50,000
	(Bill drawn and accepted)
Jul.01	Bank A/c	Dr.		47,750
	Discount Charges A/c	Dr.		2,250
	To Bills Receivable A/c				50,000
	(Bill discounted with Bank @ 185 per annum before 3 months)
Oct.04	Chunilal	Dr.		51,125
	To Bank A/c				51,125
	(Discounted bill cancelled and noting charges of Rs 1,125 paid)
Oct.04	Chunilal	Dr.		400
	To Interest A/c				400
	(Interest charges due)
Oct.04	Bank A/c	Dr.		30,400
	To Chunilal				30,400
	(60% of the amount with interest charges received by cheque)
Oct.04	Bill Receivable A/c	Dr.		21,125
	To Chunilal				21,125
	(New Bill was drawn and accepted)
Dec.07	Chunilal	Dr.		21,125
	To Bill Receivable A/c				21,125
	(Bill cancelled on insolvency)
Dec.07	Cash/Bank A/c	Dr.		6,338
	Bad-Debts A/c	Dr.		14,787
	To Chunilal				21,125
	(Chunilal became insolvent and only 30% of the amount recovered from his property)

Books of Chunilal
Journal Entry
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2010
Jun.01	Narayan	Dr.		50,000
	To Bills Payable				50,000
	(Bill drawn and accepted)
Oct.04	Bills Payable A/c	Dr.		50,000
	Noting Charges A/c	Dr.		1,125
	To Narayan				51,125
	(Bill cancelled with noting charges of Rs 1,125 paid by Narayan’s Bank A/c)
Oct.04	Interest A/c	Dr.		400
	To Narayan				400
	(Interest charges due)
Oct.04	Narayan	Dr.		30,400
	To Bank A/c				30,400
	(60% of the mount along with interest paid by cheque)
Oct.04	Narayan	Dr.		21,125
	To Bills Payable A/c				21,125
	(New bill was accepted for 40% of the amount along with noting charges)
Dec.07	Bills Payable A/c	Dr.		21,125
	To Narayan				21,125
	(Bill cancelled on insolvency)
Dec.07	Narayan	Dr.		21,125
	To Cash/Bank A/c				6,338
	To Deficiency A/c				14,787
	(Chunilal became insolvent and only 30% amount paid and rest of the amount written off as deficiency)