Question

On Feb 01, 2006, John purchased goods for Rs 15,000 from Jimmy. He immediately made a payment of Rs 5,000 by cheque and for the balance accepted the bill of exchange drawn upon him by Jimmy. The bill of exchange was payable after 40 days. Five days before the maturity of the bill, Jimmy sent the same to his bank for collection. The bank duly presented the bill to John on the due date who met the bill. The bank informed the same to Jimmy. Prepare John’s account in the books of Jimmy and Jimmy account in the books of John.

Answer 1

Journal Entries in the Books of Jimmy
Date		Particulars			L.F.	Debit Amount Rs	Credit Amount Rs
2006
Feb.01	John			Dr.		15,000
			To Sales A/c				15,000
	(Goods sold to John)
Feb.01	Bank A/c			Dr.		5,000
			To John				5,000
	(Cheque received for Rs 5,000 from John)
Feb.01	Bills Receivable A/c			Dr.		10,000
			To John A/c				10,000
	(B/R received from John for 40 days)
Mar.08	Bill sent for collection A/c			Dr.		10,000
			To Bills Receivable A/c				10,000
	(John's acceptance for B/R sent to bank for collection)
Mar.12	Bank A/c			Dr.		10,000
			To Bill sent for Collection A/c				10,000
	(John's acceptance met on due date and bank received the payment)

Journal Entries in the Books of John
Date		Particulars				L.F	Debit Amount Rs	Credit Amount Rs
2006
Feb.01	Purchases A/c				Dr.		15,000
			To Jimmy					15,000
	(Goods purchased from Jimmy)
Feb.02	Jimmy				Dr.		5,000
				To Bank A/c				5,000
	(Cheque paid to Jimmy)
Feb.02	Jimmy				Dr.		10,000
			To Bills Payable A/c					10,000
	(Bill drawn by Jimmy accepted for 40 days)
Mar.12	Bills Payable A/c				Dr.		10,000
				To Bank A/c				10,000
	(Payment of bill made on maturity to bank)