Neelam sells goods for Rs.10000 to Rashmi on credit on Jan 1,2006 and on the same date draws a 3 month bill on the later for the amount . Rashmi accepts it and returns to Neelam who discounts it with his bankers for Rs.9850. On the due date the bill is dishonoured . Noting charges Rs.150 were paid by the bank. Rashmi then pays Rs.3150 in cash and accepts a new bill at 3 months for the balance due to Neelam with Rs.120 as interest. Before maturity, Rashmi became insolvent and a final dividend of 40 paise in the rupee was recieved. Pass the journal entries in the books of neelam.

In the Books of Neelam

Journal

Date

Particulars

Debit

Amount

Rs

Credit

Amount

Rs

2006

Jan.01

 

 

Jan.01

 

 

 

Jan.01

 

 

 

 

April 04

 

 

 

April 04

 

 

 

April 04

 

 

 

April 04

 

 

 

July 07

 

 

 

July 07

Rashmi  

To Sales A/c

(Goods sold to Rashmi)

 

Bills Recivable A/c

To Rashmi

(Rashmi’s acceptance received)

 

Bank A/c

Discount A/c

To Bills Receivable

(Rashmi’s acceptance discounted with bank)

 

Rashmi

To Bank A/c

(Rashmi’s acceptance became dishonor and bank paid Rs 150 Noting Charges)

 

Cash A/c

To Rashmi

(Cash received from Rashmi)

 

Rashmi

To Interest A/c

(Interest due from Rashmi)

 

Bills Receivable A/c

To Rashmi

(Rashmi’s acceptance received)

 

Rashmi

To Bills Receivable A/c

(Rashmi’s acceptance dishonored)

 

Cash A/c

Bad Debt A/c

To Rashmi

(40% of the amount due from Rashmi received and remaining 60% consider as bad debt)

Dr.

 

 

 

Dr.

 

 

 

Dr.

Dr.

 

 

 

Dr.

 

 

 

Dr.

 

 

 

Dr.

 

 

 

Dr.

 

 

 

Dr.

 

 

 

Dr.

10,000

 

 

 

10,000

 

 

 

9,850

150

 

 

 

10,150

 

 

 

 

3,150

 

 

 

120

 

 

 

7,120

 

 

 

7,120

 

 

 

2,848

4,272

 

10,000

 

 

 

10,000

 

 

 

 

10,000

 

 

 

10,150

 

 

 

 

3,150

 

 

 

120

 

 

 

7,120

 

 

 

7,120

 

 

 

 

7,120

     

 

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