Ravi sold goods for Rs 40,000 to Sudershan on Feb 13, 2016. He drew four bills of exchange upon Sudershan. The first bill was for Rs 5,000 payable after one month. The second bill was for Rs 10,000 payable after 40 days; the third bill was for Rs 12,000 payable after three months and fourth bill was for the balance amount payable after 19 days. Sudershan accepted all the bills and returned the same to Ravi. Ravi discounted the first bill with his bank at 6% p.a. He endorsed the second bill to his creditor Mustaq for the full settlement of a debt of Rs 10,200. The third bill was kept by Ravi with him till the date of maturity. Five days before the maturity of the fourth bill, Ravi sent the bill to his bank for collection. All the four bills were dishounoured by Sudarshan on maturity. Sudershan settled Ravi’s claim in cash three days after the dishonour of each bill along with interest @ 12% p.a. for the terms of the bills. You are requested to record the necessary journal entries in the books to Ravi, Sudershan, Mustaq and bank for the above transaction. Also prepare Sudershan’s account and Mustaq’s account in the books of Ravi.

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Solution

Books of Ravi

Journal

Date

Particulars

L.F.

Debit Amount

Rs

Credit Amount Rs

2016

Feb.13

Sudershan

Dr.

40,000

To Sales A/c

40,000

(Goods sold to Sudershan)

Feb.13

Bills Receivable A/c

Dr.

40,000

To Sudershan

40,000

(Four bills from Sudershan received: the first for Rs

5,000, the second bill for Rs 10,000, the third bill for

Rs 12,000 and the fourth bill for Rs 13)

Feb.13

Bank A/c

Dr.

4,975

Discount A/c

Dr.

25

To Bills Receivable A/c

5,000

(The first bill discounted with bank at 6% p.a.)

Feb.13

Mustaq

Dr.

10,200

To Bills Receivable A/c

10,000

To Discount Received A/c

200

(The second bill endorsed to Mustaq in full settlement

of amount due to him)

Mar.03

Bill Sent for Collection A/c

Dr.

13,000

To Bills Receivable A/c

13,000

(The fourth bill sent to bank for collection)

Mar.07

Sudershan

Dr.

13,000

To Bill Sent for Collection A/c

13,000

(The fourth bill dishonoured on due date)

Mar.07

Sudershan

Dr.

81

To Interest A/c

81

(Interest due on the fourth bill Rs 13,000 for 19

days at 12% p.a,)

Mar.10

Cash A/c

Dr.

13,081

To Sudershan

13,081

(Cash received from Sudershan)

Mar.16

Sudershan

Dr.

5,000

To Bank A/c

5,000

(The first bill dishonoured)

Mar.16

Sudershan

Dr.

50

To Interest A/c

50

(Interest due on amount Rs 5,000 at 12%

for one month)

Mar.19

Cash A/c

Dr.

5,050

To Sudershan A/c

5,050

(Sudershan paid the amount due on account

dishonoured of the first bill plus interest)

Mar.28

Sudershan

Dr.

10,000

Discount Received A/c

Dr.

200

To Mustaq

10,200

(The second bill dishonoured, which had endorsed

in favour of Mustaq)

Mar.28

Sudershan

Dr.

132

To Interest A/c

132

(Interest charged at 12% on the amount due on account

of dishonour of the second bill Rs 10,000)

Apr.01

Cash A/c

Dr.

10,132

To Sudershan A/c

10,132

(Received cash from Sudershan for the second bill

along with interest)

May16

Sudershan

Dr.

12,000

To Bills Receivable A/c

12,000

(The third bill dishonoured on due date)

May16

Sudershan

Dr.

360

To Interest A/c

360

(Interest at 12% for 3 months charged on the amount due

on account of dishounor the third bill Rs 12,000)

May19

Cash A/c

Dr.

12,360

To Sudershan

12,360

(Cash received from Sudershan for the third bill along with interest 12% p.a.)

Ledger

Sundershan'sAccount

Dr.

Cr.

Date

Particulars

J.F.

Amount Rs

Date

Particulars

J.F.

Amount Rs

2016

2016

Feb.13

Sales

40,000

Feb.13

Bills Receivable

40,000

Mar.07

Bill sent for Collection

13,000

Mar.10

Cash

13,081

Mar.07

Interest

81

Mar.19

Cash

5,050

Mar.16

Bank

5,000

Apr.01

Cash

10,132

Mar.16

Interest

50

May19

Cash

12,360

Mar.28

Mustaq

10,000

Mar.28

Interest

132

May 16

Bills Receivable

12,000

May 16

Interest

360

80,623

80,623

Mustaq'sAccount

Dr.

Cr.

Date

Particulars

J.F.

Amount

Rs

Date

Particulars

J.F.

Amount

Rs

2016

2016

Feb.13

B/R

10,000

Mar.28

Sudershan

10,000

Feb.13

Discount Received

200

Mar.28

Discount Received

200

10,200

10,200

Books of Sudershan

Journal

Date

Particulars

L.F.

Debit Amount Rs

Credit Amount Rs

2016

Feb.13

Purchases A/c

Dr.

40,000

To Ravi

40,000

(Goods bought from Ravi)

Feb.13

Ravi

Dr.

40,000

To Bills Payable A/c

40,000

(Four bills drawn by Ravi accepted: the first bill for

Rs 5,000 payable after one month, the second for

Rs 10,000 payable after 40 days, the third for Rs 12,000

payable after 3 months and the fourth for Rs 13,000

payable after 19 days)

Mar.07

Bills Payable A/c

Dr.

13,000

To Ravi

13,000

(The fourth bill dishonoured)

Mar.07

Interest A/c

Dr.

81

To Ravi

81

(Interest charged for the amount of fourth bill

at 12% p.a.)

Mar.10

Ravi

Dr.

13,081

To Cash A/c

13,081

(Cash paid to Ravi for amount due on account of

dishounor of the fourth bill along with interest

at 12% p.a. for 19 days)

Mar.16

Bills Payable A/c

Dr.

5,000

To Ravi

5,000

(The first bill dishonoured)

Mar.16

Interest A/c

Dr.

50

To Ravi

50

(Interest charged at 12% p.a. on the first bill for one month)

Mar.19

Ravi

Dr.

5,050

To Cash A/c

5,050

(Cash paid to Ravi for amount due on account of

dishounor of the first bill along with interest

at 12% p.a. for one month)

Mar.28

Bills Payable A/c

Dr.

10,000

To Ravi

10,000

(The second bill dishonoured)

Mar.28

Interest A/c

Dr.

132

To Ravi

132

(Interest charged at 12% p.a. for 40 days on the second bill)

Apr.01

Ravi

Dr.

10,132

To Cash A/c

10,132

(Cash paid to Ravi for amount due on account of

dishounor of the second bill along with interest

at 12% p.a. for 40 days)

May 16

Bills Payable A/c

Dr.

12,000

To Ravi

12,000

(The third bill dishonoured)

Mar.16

Interest A/c

Dr.

360

To Ravi

360

(Interest charged at 12% p.a. for 3 months on third bill)

May 19

Ravi

Dr.

12,360

To Cash A/c

12,360

(Cash paid to Ravi for amount due on account of

dishounor of the third bill along with interest

at 12% p.a. for 3 months)

Books of Mustaq

Journal

Date

Particulars

L.F

Debit Amount Rs

Credit Amount Rs

2016

Feb.13

Bills Receivable A/c

Dr.

10,000

Discount Allowed A/c

Dr.

200

To Ravi

10,200

(Bills Receivable received from Ravi and

allowed discount)

Mar.28

Ravi

Dr.

10,200

To Bills Receivable A/c

10,000

To Discount Received

200

(Bill dishonoured)

Books of Bank

Journal

Date

Particulars

L.F

Debit Amount

Rs

Credit Amount

Rs

2016

Mar.03

Bills Receivable A/c

Dr.

13,000

To Bills for Collection A/c

13,000

(Bill received from Ravi for collection)

Mar.07

Bills for Collection A/c

Dr.

13,000

To Bills Receivable A/c

13,000

(Bill dishonoured)

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Similar questions

Ravi sold goods for Rs 40,000 to Sudershan on Feb 13, 2016. He drew four bills of exchange upon Sudershan. The first bill was for Rs 5,000 payable after one month. The second bill was for Rs 10,000 payable after 40 days; the third bill was for Rs 12,000 payable after three months and fourth bill was for the balance amount payable after 19 days. Sudershan accepted all the bills and returned the same to Ravi. Ravi discounted the first bill with his bank at 6% p.a. He endorsed the second bill to his creditor Mustaq for the full settlement of a debt of Rs 10,200. The third bill was kept by Ravi with him till the date of maturity. Five days before the maturity of the fourth bill, Ravi sent the bill to his bank for collection. All the four bills were dishounoured by Sudarshan on maturity. Sudershan settled Ravi’s claim in cash three days after the dishonour of each bill along with interest @ 12% p.a. for the terms of the bills. You are requested to record the necessary journal entries in the books to Ravi, Sudershan, Mustaq and bank for the above transaction. Also prepare Sudershan’s account and Mustaq’s account in the books of Ravi.

On Jan 15, 2016 Raghu sold goods worth Rs 35,000 to Devendra and drew up to the latter three bills of exchanges. The first bill was for Rs 5,000 payable after one month, the second bill was for Rs 20,000 payable after three months and third bill for balance amount for 4 months. Raghu endorsed the first bill in favour of his creditor Dewan in full settlement of a debt of Rs 5,200. The second bill was discounted by Raghu @ 6 % p.a. and the third bill was retained by Raghu till the date of maturity. Devendra dishonoured the bill on maturity and the bank paid Rs 30 as noting charges. Four days before the maturity of the third bill Raghu, sent the same for collection to his bank. The third bill was also dishonoured by Devendra and the bank paid Rs 200 as noting charges. Five days after the dishonour of the bill Devendra paid the entire amount due to Raghu along with interest Rs 1,000 for this purpose Devendra obtained a short term loan from his bank. You are requested to record the necessary journal entries in the books of Raghu Devendra and Dewan and also prepare Devendra’s account in Raghu’s books and Raghu’s account in Devendra’s account.

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You are requested to record the necessary Journal entries in the Books of Raghu, Devendra and Dewan and also prepare Devendra's account in Raghu's Book and Raghu's account in Devendra's Book.

Vimal purchased goods Rs 25,000 from Kamal on Jan 15, 2016 and accepted a bill of exchange drawn upon him by Kamal payable after two months. On the date of the maturity the bill was duly presented for payment. Vimal dishonoured the bill. record the necessary journal entries in the books of Kamal and Vimal when.

• The bill was retained by Kamal till the date of its maturity.

• The bill was immediately discounted by Kamal with his bank @ 6% p.a.

• The bill was endorsed by Kamal in favour of his creditor Sharad.

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Darshan sold goods for Rs 40,000 to Varun on 8.1.2016 and drew upon him a bill of exchange payable after two months. Varun accepted the bill and returned the same to Darshan. On the due date the bill was met by Varun. Record the necessary Journal entries in the books of Darshan and Varun in the following circumstances.

· When the bill was retained by Darshan till the date of its maturity.

· When Darshan immediately discounted the bill @ 6% p.a. with his bank.

· When the bill was endorsed immediately by Darshan in favour of his creditor Suresh.

· When three days before its maturity, the bill was sent by Darshan to his bank for collection.

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Ledger Sundershan'sAccount
Dr.							Cr.
Date	Particulars	J.F.	Amount Rs	Date	Particulars	J.F.	Amount Rs
2016				2016
Feb.13	Sales		40,000	Feb.13	Bills Receivable		40,000
Mar.07	Bill sent for Collection		13,000	Mar.10	Cash		13,081
Mar.07	Interest		81	Mar.19	Cash		5,050
Mar.16	Bank		5,000	Apr.01	Cash		10,132
Mar.16	Interest		50	May19	Cash		12,360
Mar.28	Mustaq		10,000
Mar.28	Interest		132
May 16	Bills Receivable		12,000
May 16	Interest		360

			80,623				80,623

Mustaq'sAccount
Dr.							Cr.
Date	Particulars	J.F.	Amount Rs	Date	Particulars	J.F.	Amount Rs
2016				2016
Feb.13	B/R		10,000	Mar.28	Sudershan		10,000
Feb.13	Discount Received		200	Mar.28	Discount Received		200

			10,200				10,200

Books of Sudershan
Journal
Date				Particulars				L.F.	Debit Amount Rs	Credit Amount Rs
2016
Feb.13	Purchases A/c				Dr.				40,000
			To Ravi							40,000
	(Goods bought from Ravi)

Feb.13	Ravi				Dr.				40,000
		To Bills Payable A/c								40,000
	(Four bills drawn by Ravi accepted: the first bill for Rs 5,000 payable after one month, the second for Rs 10,000 payable after 40 days, the third for Rs 12,000 payable after 3 months and the fourth for Rs 13,000 payable after 19 days)

Mar.07	Bills Payable A/c						Dr.		13,000
				To Ravi						13,000
	(The fourth bill dishonoured)

Mar.07	Interest A/c						Dr.		81
		To Ravi								81
	(Interest charged for the amount of fourth bill at 12% p.a.)

Mar.10	Ravi						Dr.		13,081
				To Cash A/c						13,081
	(Cash paid to Ravi for amount due on account of dishounor of the fourth bill along with interest at 12% p.a. for 19 days)

Mar.16	Bills Payable A/c				Dr.				5,000
				To Ravi						5,000
	(The first bill dishonoured)

Mar.16	Interest A/c				Dr.				50
				To Ravi						50
	(Interest charged at 12% p.a. on the first bill for one month)

Mar.19	Ravi						Dr.		5,050
				To Cash A/c						5,050
	(Cash paid to Ravi for amount due on account of dishounor of the first bill along with interest at 12% p.a. for one month)

Mar.28	Bills Payable A/c						Dr.		10,000
				To Ravi						10,000
	(The second bill dishonoured)

Mar.28	Interest A/c						Dr.		132
				To Ravi						132
	(Interest charged at 12% p.a. for 40 days on the second bill)

Apr.01	Ravi				Dr.				10,132
		To Cash A/c								10,132
	(Cash paid to Ravi for amount due on account of dishounor of the second bill along with interest at 12% p.a. for 40 days)

May 16	Bills Payable A/c				Dr.				12,000
				To Ravi						12,000
	(The third bill dishonoured)

Mar.16	Interest A/c				Dr.				360
				To Ravi						360
	(Interest charged at 12% p.a. for 3 months on third bill)

May 19	Ravi					Dr.			12,360
				To Cash A/c						12,360
	(Cash paid to Ravi for amount due on account of dishounor of the third bill along with interest at 12% p.a. for 3 months)

Books of Mustaq Journal
Date		Particulars		L.F	Debit Amount Rs	Credit Amount Rs
2016
Feb.13	Bills Receivable A/c		Dr.		10,000
	Discount Allowed A/c		Dr.		200
		To Ravi				10,200
	(Bills Receivable received from Ravi and allowed discount)

Mar.28	Ravi		Dr.		10,200
		To Bills Receivable A/c				10,000
		To Discount Received				200
	(Bill dishonoured)

Books of Bank Journal
Date		Particulars		L.F	Debit Amount Rs	Credit Amount Rs
2016
Mar.03	Bills Receivable A/c		Dr.		13,000
		To Bills for Collection A/c				13,000
	(Bill received from Ravi for collection)

Mar.07	Bills for Collection A/c		Dr.		13,000
		To Bills Receivable A/c				13,000
	(Bill dishonoured)