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Standard XII
Accountancy
Issued at a Discount and Redeemed at Par
PRACTICAL PRO...
Question

PRACTICAL PROBLEMS

On 5th September, 2010 Prakash Patil accepted a bill of Rs 16,000 drawn by Chandu Chaudhari for 3 months. This bill was drawn for amount which Prakash Patil owed to Chandu Chaudhari. On same date Chandu Chaudhari purchased goods from Magan Mahajan for Rs 20,000 for this Chandu Chaudhari endorsed Prakash Patil’s acceptance in favour of Magan Mahajan and accepted 2 months bill for the balance due. On 5th October, 2010 Magan Mahajan discounted both the bill with his bank @ 12% p.a.

On the due date Prakash Patil’s honoured his acceptance while Chandu Chaudhari unable to meet the payment for his acceptance. Magan Mahajan’s bank paid noting charges Rs 100.

Pass Journal entries in the books of Magan Mahajan and also prepare Prakash Patil’s and Magan Mahajan ledger account in the books of Chandu Chaudhari.

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Solution

Books of Magan Mahajan
Journal Entry
Date
Particulars
L.F.
Debit Amount
Rs
Credit Amount
Rs
2010
Sept.05
Chandu Chaudhari
Dr.
20,000
To Sales A/c
20,000
(Goods sold to Chandu Chaudhari)
Sept.05
Bills Receivable A/c (Bill no 1)
Dr.
16,000
Bills Receivable A/c (Bill no 2)
4,000
To Chandu Chaudhari
20,000
(Bill drawn and accepted)
Oct.05
Bank A/c
Dr.
15,680
Discount A/c
Dr.
320
To Bills Receivable A/c (Bill no 1)
16,000
(Bill discounted with the Bank @ 12% per annum before 2 months)
Oct.05
Bank A/c
Dr.
3,960
Discount A/c
Dr.
40
To Bills Receivable A/c (Bill no 2)
4,000
(Bill discounted with the Bank @ 12% per annum before 2 months)
Nov.08
Chandu Chaudhari
Dr.
4,100
To Bank A/c
4,100
(Discounted bill dishonoured on maturity date, noting charges of Rs 100 paid)

In the Books of Chandu Chaudhari:
Prakash Patil’s Account
Dr.
Cr.
Date
Particulars
J.F.
Amount
(Rs)
Date
Particulars
J.F.
Amount
(Rs)
2011
2011
Sept.05
Balance b/d
16,000
Sept.05
Bills Receivable A/c
16,000
16,000
16,000
Magan Mahajan’s Account
Dr.
Cr.
Date
Particulars
J.F.
Amount
(Rs)
Date
Particulars
J.F.
Amount
(Rs)
2011
2011
Sept.05
Bills Receivable A/c
16,000
Sept.05
Purchases A/c
20,000
Sept.05
Bills Payable A/c
4,000
Nov.08
Bills Payable A/c
4,100
Nov.08
Balance c/d
4,100
24,100
24,100

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