Raja of Ngpur draws a bill on Pradhan of Bandara for Rs. 6,000 at 3 months. Pradhan accepted and returned it to Raja. Raja then sent the bill to bank for collection.
On due date, Pradhan finds himself unable to make payment of the bill and requests Raja to along with interest Rs. 250 in cash and should accept new bill for the balance at 2 months. These arrangements were carried through.
Afterward, one month before due date of new bill Pradhan retired his acceptance by paying Rs. 4, 850.
Give Journal entries in the books of Raja of Nagpur.

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Solution

In the books of Raja of Nagpur

Date

Particulars

Amount (Dr.)

Amount (Cr.)

1.

Bills receivable A/c

Dr.

6000

To Pradhan

6000

(Being bill received from pradhan)

2.

Bill sent for collection A/c

Dr.

6000

To Bill receivable

6000

(Being bill sent for collection)

3.

Pradhan A/c

Dr.

6000

To bill sent for collection

6000

(Being bill sent for renewal)

4.

Cash A/c

Dr.

1250

To Pradhan

1000

To interest

250

(Being cash paid by pradhan)

5.

Bills receivable A/c

Dr.

5000

To pradhan

5000

(Being new bill received)

6.

Cash A/c

Dr.

4850

Rebate A/c

Dr.

150

To bills receivable A/c

5000

(Being bill retired under rebate)

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Date	Particulars		Amount (Dr.)	Amount (Cr.)
1.	Bills receivable A/c	Dr.	6000
	To Pradhan			6000
	(Being bill received from pradhan)
2.	Bill sent for collection A/c	Dr.	6000
	To Bill receivable			6000
	(Being bill sent for collection)
3.	Pradhan A/c	Dr.	6000
	To bill sent for collection			6000
	(Being bill sent for renewal)
4.	Cash A/c	Dr.	1250
	To Pradhan			1000
	To interest			250
	(Being cash paid by pradhan)
5.	Bills receivable A/c	Dr.	5000
	To pradhan			5000
	(Being new bill received)
6.	Cash A/c	Dr.	4850
	Rebate A/c	Dr.	150
	To bills receivable A/c			5000
	(Being bill retired under rebate)