CameraIcon
CameraIcon
SearchIcon
MyQuestionIcon


Question

Ram owes ₹ 2,000 to Mohan on 1st January, 2019. On this date, he accepted a draft for the amount for 3 months. Mohan got the bill discounted at his bank @ 6% p.a. On the due date, the bill was dishonured, nothing charges ₹ 20. Ram agreed to pay ₹ 520 immediately and accept another bill for the remaining amount for 3 months together with interest at 9% p.a. This bill was met on the due date. Give the Journal entries in the books of both the parties.


Solution

Books of Mohan

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2019

 

 

 

 

Jan.01

Bills Receivable A/c

Dr.

 

2,000

 

 

To Ram

 

 

2,000

 

(Ram’s acceptance received)

 

 

 

 

 

 

 

 

Jan.01

Bank A/c

Dr.

 

1,970

 

 

Discount Charges A/c

Dr.

 

30

 

 

To Bills Receivable A/c

 

 

2,000

 

(Ram’s acceptance was discounted at 6% p. a. for 3 months)

 

 

 

 

 

 

 

 

April 04

Ram

Dr.

 

2,020

 

 

To Bank

 

 

2,020

 

(Ram’s acceptance which was discounted with bank dishonoured)

 

 

 

 

 

 

 

 

April 04

Cash A/c

Dr.

 

520

 

 

To Ram

 

 

520

 

(Cash received from Ram)

 

 

 

 

 

 

 

 

April 04

Ram

Dr.

 

34

 

 

To Interest A/c

 

 

34

 

(Interest due from on amount outstanding at 9% p. a. for 3 months)

 

 

 

 

Working Note: Interest = 1,500 × 9% × 3/12 = Rs 34

 

 

 

 

 

 

 

 

April 04

Bill Receivable A/c

Dr.

 

1,534

 

 

To Ram

 

 

1,534

 

(Ram’s acceptance received for outstanding amount including interest)

 

 

 

 

 

 

 

 

April 04

Cash A/c

Dr.

 

1,534

 

 

To Bills Receivable A/c

 

 

1,534

 

(Cash received on honouring of bill)

 

 

 

 

 

 

 

 

 

Books of Ram

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2019

 

 

 

 

Jan.01

Mohan

Dr.

 

2,000

 

 

To Bills Payable A/c

 

 

2,000

 

(Bill drawn by Mohan was accepted)

 

 

 

 

 

 

 

 

April 04

Bills Payable A/c

Dr.

 

2,000

 

 

Noting Charges A/c

Dr.

 

20

 

 

To Mohan

 

 

2,020

 

(Bill dishonoured on its due date)

 

 

 

 

 

 

 

 

April 04

Mohan

Dr.

 

520

 

 

To Cash A/c

 

 

520

 

(Cash paid to Mohan)

 

 

 

 

 

 

 

 

April 04

Interest A/c

Dr.

 

34

 

 

To Mohan

 

 

34

 

(Interest due to Mohan on outstanding balance for 3 months)

 

 

 

 

 

 

 

 

April 04

Mohan

Dr.

 

1,534

 

 

To Bills Payable A/c

 

 

1,534

 

(Bill accepted for the amount outstanding including interest to Mohan)

 

 

 

 

 

 

 

 

April 04

Bills Payable A/c

Dr.

 

1,534

 

 

To Cash A/c

 

 

1,534

 

(Bill discharged on maturity)

 

 

 

 

 

 

 

 

 


Accountancy
T.S. Grewal (2019)
All

Suggest Corrections
thumbs-up
 
0


similar_icon
Similar questions
View More


similar_icon
Same exercise questions
View More



footer-image