Question

X sold goods to Y on 1.3.2017 for ₹ 12,000 and drew upon Y a bill of exchange for the same amount payable after two months. X immediately discounted the bill with his bank at 9% p.a. The maturity date of the bill was a non business day (holiday), therefore, X had to present the bill as per the provisions of the Indian Instruments Act, 1881. The bill was dishonoured by Y and X paid ₹ 45 as noting charges. Y settled the claim of X five days after the dishonour of the bill by a cheque which included interest @ 12% for the term of the bill.
Journalise the above transactions in the books of X and Y and prepare Y's account in the books of X and X's account in the books of Y.

Answer 1

Books of X Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
2017
Mar. 01	Y	Dr.		12,000
	To Sales A/c				12,000
	(Goods sold to Y)
Mar. 01	Bills Receivable A/c	Dr.		12,000
	To Y				12,000
	(Y accepted the bill)
Mar.01	Bank A/c	Dr.		11,820
	Discounting Charges A/c	Dr.		180
	To Bills Receivable A/c				12,000
	(Bills discounted with the bank @ 9% p.a. for 2 month)
May 03	Y	Dr.		12,045
	To Bank A/c				12,045
	(Bills dishonoured on due date and noting charges paid)
May 08	Y	Dr.		241
	To Interest A/c				241
	(Interest due to be received)
May 08	Bank A/c	Dr.		12,286
	To Y				12,286
	(Cheque received from Y)

Y’s Account
Dr.									Cr.
Date		Particulars	J.F.	Amount (Rs)	Date	Particulars	J.F.	Amount (Rs)
2017					2017
Mar. 01		Sales A/c		12,000	Mar. 01	Bills Receivable A/c		12,000
May 03		Bank A/c		12,045	May 08	Bank A/c		12,286
May 08		Interest A/c		241
				24,286				24,286

Books of Y Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
2017
Mar. 01	Purchases A/c	Dr.		12,000
	To X				12,000
	(Goods purchased from X)
Mar. 01	X	Dr.		12,000
	To Bills Payable A/c				12,000
	(Bill drawn by X, accepted)
May 03	Bills Payable A/c	Dr.		12,000
	Noting Charges A/c	Dr.		45
	To X				12,045
	(Bill dishonoured on due date and noting charges paid)
May 08	Interest A/c	Dr.		241
	To X				241
	(Interest due to be paid)
May 08	X	Dr.		12,286
	To Bank A/c				12,286
	(Cheque issued from X)

X’s Account
Dr.									Cr.
Date		Particulars	J.F.	Amount (Rs)	Date	Particulars	J.F.	Amount (Rs)
2017					2017
Mar. 01		Bills Payable A/c		12,000	Mar. 01	Purchases A/c		12,000
May 08		Bank A/c		12,286	May 03	Bills Payable A/c		12,000
					May 03	Noting Charges A/c		45
					May 08	Interest A/c		241
				24,286				24,286

Working Notes:

WN1 Calculation of Discounting Charges

$\mathrm{Discounting}\mathrm{Charges}=12,000\times \frac{9}{100}\times \frac{2}{12}=\mathrm{Rs}180$

WN2 Calculation of amount of Interest

$\mathrm{Amount}\mathrm{of}\mathrm{Interest}=12,045\times \frac{12}{100}\times \frac{2}{12}=\mathrm{Rs}241$

Note: When due date falls on Public holiday or Sunday or Gazetted holiday (here May 4, 2017), then due date is preceding date (here May 03, 2017).