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Page No 16.35:

Question 1:

Calculate the due dates of the bills in the following cases:
 

Date of Bill
Tenure (Period)
(i)
1st December, 2018
60 Days
(ii)
30th April, 2019
2 Months
(iii)
28th January, 2019
1 Month
(iv)
23rd November, 2018
2 Months
(v)
29th May, 2018
4 Months
​

Answer:

Date of Bill

Tenure

Calculation

Due Date

(i) December 01, 2018

60 Days

30 (December) + 30 (January) + 3 days of grace

February 02, 2019

(ii) April 30, 2019

2 Months

2 Months from April 30, 2019 would be June 30, 2019 + 3 days of grace

July 03, 2019

(iii) January 28, 2019

1 Month

1 Month from January 28, 2019 would be February 28, 2019 + 3 days of grace

March 03, 2019

(iv) November 23, 2018

2 Months

2 Months from November 23, 2018 would be January 23, 2019 + 3 days of grace

January 26, 2019, but it is a national holiday so, due date would be one day before i.e., January 25, 2019

(v) May 29, 2018

4 Months

4 Months from May 29, 2019 would be September 29, 2019 + 3 days of grace

October 02, 2019 but it is a national holiday so, due date would be one day before i.e., October 01, 2019

 

Page No 16.35:

Question 2:

On 10th March, 2019, A draws on B a bill at 3 months for â‚¹ 20,000 which B accepts immediately and returns to A. The bill is honoured due date.
​Pass necessary Journal entries in the books of both the parties.

Answer:

Journal
in the books of A (Drawer)
Date
Particulars
L.F.
Debit
Amount
(₹)
Credit
Amount
(₹)
2019
 
 
 
 
 
Mar 10
Bills Receivable A/c
Dr.
 
20,000
 
 
  To B’s A/c
 
 
 
20,000
 
(Bill received)
 
 
 
 
 
 
 
 
 
 
June 13
Cash A/c
Dr.
 
20,000
 
 
  To Bills Receivable A/c
 
 
 
20,000
 
(Cash received against bill)
 
 
 
 
 
Journal
in the books of B (Drawee)
Date
Particulars
L.F.
Debit
Amount
(₹)
Credit
Amount
(₹)
2019
 
 
 
 
 
Mar 10
A A/c
Dr.
 
20,000
 
 
  To Bills Payable A/c
 
 
 
20,000
 
(Bill accepted)
 
 
 
 
 
 
 
 
 
 
June 13
Bills Payable A/c
Dr.
 
20,000
 
 
  To Cash A/c
 
 
 
20,000
 
(Cash paid against bill)
 
 
 
 

Page No 16.35:

Question 3:

On 1st January, 2019, A sold goods to B for ₹ 5,000 plus IGST @ 18%. A received ₹ 900 by cheque from B and drew on him a bill for the balance amount payable 3 months after date. The bill was duly accepted by B. A retained the bill till due date. On due date, the bill was paid.
Pass Journal entries in the books of A and B. Also, show necessary accounts in the books of both the parties.

Answer:

Books of A

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2019

 

 

 

 

Jan.01

B

Dr.

 

5,900

 

 

To Sales A/c
To Output IGST A/c

 

 

5,000
900

 

(Goods sold to B plus IGST @ 18%)

 

 

 

 

 

 

 

 

Jan.01

Bills Receivable A/c
Bank A/c

Dr.
Dr.

 

5,000
900

 

 

To B

 

 

5,000

 

(B accepted the bill and paid IGST by cheque)

 

 

 

 

 

 

 

 

Apr.04

Cash A/c

Dr.

 

5,000

 

 

To Bills Receivable A/c

 

 

5,000

 

(Amount of bill received on its maturity)

 

 

 

 

 

 

 

 

 

Books of B

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2019

 

 

 

 

Jan.01

Purchases A/c
Input IGST A/c

Dr.
Dr.

 

5,000
900

 

 

To A

 

 

5,900

 

(Goods bought from A plus IGST @ 18%)

 

 

 

 

 

 

 

 

Jan.01

A

Dr.

 

5,900

 

 

To Bills Payable A/c
To Bank A/c

 

 

5,000
900

 

(Bill drawn by A accepted and IGST paid by cheque)

 

 

 

 

 

 

 

 

Apr.04

Bills Payable A/c

Dr.

 

5,000

 

 

To Cash A/c

 

 

5,000

 

(Payment of bill was made on its due date )

 

 

 

 

 

 

 

 

 

Page No 16.35:

Question 4:

Vinod sold goods to Darbara Singh for ₹ 1,000 on 1st January, 2019. He drew on the latter a bill for the amount payable 3 months after date.He discounted the bill with his bank for ₹ 990 on 4th January, 2019. On maturity, the bill is duly met. Make the Journal entries in the books of Vinod and Darbara Singh.

Answer:

Books of Vinod

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2019          

Jan.1

Darbara Singh

Dr.

 

1,000

 

 

To Sales A/c

 

 

1,000

 

(Goods sold to Darbara Singh)

 

 

 

 

 

 

 

 

Jan.1

Bills Receivable A/c

Dr.

 

1,000

 

 

To Darbara Singh

 

 

1,000

 

(Bills accepted by Darbara Singh)

 

 

 

 

 

 

 

 

Jan.4

Bank A/c

Dr.

 

990

 

 

Discount Charges A/c

Dr.

 

10

 

 

To Bills Receivable A/c

 

 

1,000

 

(Darbara Singh’s acceptance discounted at 9% p.a. for 3 month)

 

 

 

 

 

 

 

 

 

Books of Darbara Singh

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2019          

Jan.1

Purchases A/c

Dr.

 

1,000

 

 

To Vinod

 

 

1,000

 

(Goods bought from Vinod )

 

 

 

 

 

 

 

 

Jan.1

Vinod

Dr.

 

1,000

 

 

To Bills Payable A/c

 

 

1,000

 

(Bill drawn by Vinod accepted)

 

 

 

 

 

 

 

 

Mar.4

Bills Payable A/c

Dr.

 

1,000

 

 

To Bank A/c

 

 

1,000

 

(Payment of bill was made on its due date.)

 

 

 

 

 

 

 

 

 



Page No 16.36:

Question 5:

On 1st January, 2019, X sold goods of ₹ 20,000 to Y and drew a bill on Y at three months for the amount. Y accepted the bill. The bill is met on maturity. Pass the necessary Journal entries in the books of X and Y, if X discounted the bill @ 12% p.a. from bank on 4th January.

Answer:

In the books  of X

Journal

Date

Particulars

 

L.F.

Debit

Amount
(₹)

Credit
Amount
(₹)

2019

 

 

 

 

 

January 01

Y’s A/c

Dr.

 

20,000

 

 

  To Sales A/c

 

 

 

20,000

 

(Being goods sold to Y on credit)

 

 

 

 

 

 

 

 

 

 

January 01

Bills Receivable A/c

Dr.

 

20,000

 

 

  To Y’s A/c

 

 

 

20,000

 

(Being bill drawn on Y for three months)

 

 

 

 

 

 

 

 

 

 

January 04

Bank A/c

Dr.

 

19,400

 

 

Discounting Charges A/c

Dr.

 

600

 

 

  To Bills Receivable A/c

 

 

 

20,000

 

(Being bill discounted with bank and charges paid @12% p.a.)

 

 

 

 

Working Notes:
Discounting Charges = ₹ (20,000 × 12/100 × 3/12) = ₹ 600

In the books  of Y

Journal

Date

Particulars

 

L.F.

Debit

Amount
(₹)

Credit
Amount
(₹)

2019

 

 

 

 

 

Jan. 01

Purchases A/c

Dr.

 

20,000

 

 

  To X’s A/c

 

 

 

20,000

 

(Being goods purchased from X on credit)

 

 

 

 

 

 

 

 

 

 

Jan. 01

X’s A/c

Dr.

 

20,000

 

 

  To Bills Payable A/c

 

 

 

20,000

 

(Being acceptance given to X)

 

 

 

 

 

 

 

 

 

 

April 04

Bills Payable A/c

Dr.

 

20,000

 

 

  To Bank A/c

 

 

 

20,000

 

(Being bill paid on maturity)

 

 

 

 

Page No 16.36:

Question 6:

Dinesh received from Shridhar an acceptance for ₹ 3,000 on 1st September, 2018 at 3 months. Dinesh got the acceptance discounted at 9% p.a. from his bank. On the due date, Shridhar paid the required amount.
Give the Journal entries in the books of Dinesh and Shridhar.

Answer:

Books of Dinesh

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2018

 

 

 

 

Sep.01

Bills Receivable A/c

Dr.

 

3,000

 

 

To Shridhar

 

 

3,000

 

(Shridhar acceptance was received)

 

 

 

 

 

 

 

 

Sep.01

Bank A/c

Dr.

 

2,932.50

 

 

Discount Charges A/c

Dr.

 

67.50

 

 

To Bills Receivable A/c

 

 

3,000

 

(Shridhar’s acceptance was discounted with bank)

 

 

 

 

 

 

 

 

 

 

Books of Shridhar

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2018

 

 

 

 

Sep.01

Dinesh

Dr.

 

3,000

 

 

To Bills Payable A/c

 

 

3,000

 

(Bills drawn by Shridhar accepted)

 

 

 

 

 

 

 

 

Dec.04

Bills Payable A/c

Dr.

 

3,000

 

 

To Bank A/c

 

 

3,000

 

(Shridhar’s acceptance discharged on its due date)

 

 

 

 

 

 

 

 

 

Page No 16.36:

Question 7:

A sells goods of ₹ 10,000 on 1st March, 2019 to B on credit. B accepts a bill on the same date for the amount payable three months after date. A discounts the bill at 6% p.a. from bank on 4th April. On maturity, the bill  is met by B. Pass the necessary Journal entries in the books of both the parties.

Answer:

In the books  of A

Journal

Date

Particulars

L.F.

Debit
Amount
(₹)

Credit
Amount
(₹)

2019

 

 

 

 

 

March 01

B’s A/c

Dr.

 

10,000

 

 

  To Sales A/c

 

 

 

10,000

 

(Being goods sold to B on credit)

 

 

 

 

 

 

 

 

 

 

March 01

Bills Receivable A/c

Dr.

 

10,000

 

 

  To B’s A/c

 

 

 

10,000

 

(Being bill drawn on B for three months)

 

 

 

 

 

 

 

 

 

 

April 04

Bank A/c

Dr.

 

10,000

 

 

Discounting Charges A/c

Dr.

 

100

 

 

  To Bills Receivable A/c

 

 

 

9,900

  (Being bill discounted with bank and charges paid @6% p.a.)

 

 

 

 

Working Notes:
Discounting Charges = ₹ (10,000 × 6/100 × 2/12) = ₹ 100

In the books  of B

Journal

Date

Particulars

L.F.

Debit
Amount
(₹)

Credit
Amount
(₹)

2019

 

 

 

 

 

March 01

Purchases A/c

Dr.

 

10,000

 

 

  To A’s A/c

 

 

 

10,000

 

(Being goods purchased from A on credit)

 

 

 

 

 

 

 

 

 

 

March 01

A’s A/c

Dr.

 

10,000

 

 

  To Bills Payable A/c

 

 

 

10,000

 

(Being acceptance given to A)

 

 

 

 

 

 

 

 

 

 

June 04

Bills Payable A/c

Dr.

 

10,000

 

 

  To Bank A/c

 

 

 

10,000

 

(Being bill paid on maturity)

 

 

 

 

Page No 16.36:

Question 8:

A drew a bill of ₹ 1,000 on B for 3 months which was duly accepted by the latter. A endorsed the bill to C in full payment of his own acceptance to C for a like amount. C endorsed the bill to B.
Pass the Journal entries in the books of A, B and C.

Answer:

Books of A

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

Bills Receivable A/c

Dr.

 

1,000

 

 

To B

 

 

1,000

 

(B’s acceptance was received)

 

 

 

 

 

 

 

 

 

C

Dr.

 

1,000

 

 

To Bills Receivable A/c

 

 

1,000

 

(B’s acceptance endorsed in favour of C)

 

 

 

 

 

 

 

 

 

Books of B

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

A

Dr.

 

1,000

 

 

To Bills Payable A/c

 

 

1,000

 

(Bill drawn by A was accepted)

 

 

 

 

 

 

 

 

 

Bills Payable A/c

Dr.

 

1,000

 

 

To Bills Receivable A/c

 

 

1,000

 

(Amount owed from C was settled by Bill Payable)

 

 

 

 

 

 

 

 

 

 

Books of C

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

Bills Receivable A/c

Dr.

 

1,000

 

 

To A

 

 

1,000

 

(Bills Receivable was received from A)

 

 

 

 

 

 

 

 

 

B

Dr.

 

1,000

 

 

To Bills Receivable A/c

 

 

1,000

 

(Amount owed to B was settled by Bills Receivable)

 

 

 

 

 

 

 

 

 

Page No 16.36:

Question 9:

A owed B ₹ 8,000. He gave a bill for the same on 1st August, 2018 payable after 4 months at the Bank of India, Chandni Chowk, Delhi. Immediately after receiving the bill, B endorsed it to C in payment of his debt. On 1st September, C discounted the bill at 12% p.a. The bill is met on due date.
Pass the necessary Journal entries in the books of A, B and C.

Answer:

Books of A

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2018

 

 

 

 

Aug.01

B

Dr.

 

8,000

 

 

To Bills Payable A/c

 

 

8,000

 

(Bill drawn by B was accepted)

 

 

 

 

 

 

 

 

Dec.04

Bills Payable A/c

Dr.

 

8,000

 

 

To Bank A/c

 

 

8,000

 

(Payment made to meet the bill on its maturity)

 

 

 

 

 

 

 

 

 

Books of B

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2018

 

 

 

 

Aug 01

Bills Receivable A/c

Dr.

 

8,000

 

 

To A

 

 

8,000

 

(A’s acceptance was received)

 

 

 

 

 

 

 

 

Aug 01

C

Dr.

 

8,000

 

 

To Bills Receivable A/c

 

 

8,000

 

(A’s acceptance endorsed in favour of C)

 

 

 

 

 

 

 

 

 

Books of C

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2018

 

 

 

 

Aug 01

Bills Receivable A/c

Dr.

 

8,000

 

 

To B

 

 

8,000

 

(Bills Receivable was received from B)

 

 

 

 

 

 

 

 

 Sep 01

Bank A/c

Dr.

 

7,760

 

 

Discount Charges A/c

Dr.

 

240

 

 

To Bills Receivable A/c

 

 

8,000

 

(Bill discount at 12% p.a. for 3 months)

 

 

 

 

 

 

 

 

 

Working Note:

Page No 16.36:

Question 10:

A sold goods to B for ₹ 20,000 plus CGST and SGST @ 9% each on credit 3 months. B paid A ₹ 3,600 by cheque and accepted a draft for the balance amount. The draft was endorsed in favour of C, who got the payment on maturity.
Give Journal entries in the books of A.

Answer:

Books of A

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

 

B

Dr.

 

23,600

 

 

To Sales A/c
To Output CGST A/c
To Output SGST A/c

 

 

20,000
1,800
1,800

 

(Goods sold to B plus CGST and SGST @ 9% each)

 

 

 

 

 

 

 

 

 

Bills Receivable A/c
Bank A/c

Dr.
Dr.

 

20,000
3,600

 

 

To B

 

 

23,600

 

(B accepted the bill and paid GST by cheque)

 

 

 

 

 

 

 

 

 

C

Dr.

 

20,000

 

 

To Bills Receivable A/c

 

 

20,000

 

(B’s acceptance endorsed in favour of C)

 

 

 

 

 

 

 

 

 

Page No 16.36:

Question 11:

Mohan Singh draws a bill on Jagat for ₹ 1,000 payable 2 months after date. Immediately after its acceptance, Mohan Singh sends the bill to his bank for collection. On due date, bank gets the payment. Make the entries in the books of all the parties.

Answer:

Books of Mohan Singh

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

Bills Receivable A/c

Dr.

 

1,000

 

 

To Jagat

 

 

1,000

 

(Jagat acceptance was received)

 

 

 

 

 

 

 

 

 

Bills Sent for Collection A/c

Dr.

 

1,000

 

 

To Bills Receivable A/c

 

 

1,000

 

(Bill Receivable sent to bank for collection)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

1,000

 

 

To Bills Sent for Collection A/c

 

 

1,000

 

(Payment of bill received by bank)

 

 

 

 

 

 

 

 

 

 

Books of Jagat

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

Mohan Singh

Dr.

 

1,000

 

 

To Bills Payable A/c

 

 

1,000

 

(Bills drawn by Mohan Singh was accepted)

 

 

 

 

 

 

 

 

 

Bills Payable A/c

Dr.

 

1,000

 

 

To Bank A/c

 

 

1,000

 

(Payment was made to meet the bill)

 

 

 

 

 

 

 

 

 

Page No 16.36:

Question 12:

X draws on Y a bill for ₹ 4,000 which was duly accepted by Y. Y meets the bill on its due date. Show what entries would be passed in the books of X under each of the following circumstances:
(a) If X retains the bill till due date.
(b) If X discounts the same with his banker paying ₹ 100 for discount.
(c) If X endorses the same to his creditor Z in full settlement of his debt of ₹ 4,080.
(d) If X sends the bill to his banker for collection the next day.

Answer:

Case (a)

Books of X

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

Bills Receivable A/c

Dr.

 

4,000

 

 

To Y

 

 

4,000

 

(Y’s acceptance was received)

 

 

 

 

 

 

 

 

 

Cash A/c

Dr.

 

4,000

 

 

To Bills Receivable A/c

 

 

4,000

 

(Amount of bill received on its maturity)

 

 

 

 

 

 

 

 

 

Case (b)

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

Bills Receivable A/c

Dr.

 

4,000

 

 

To Y

 

 

4,000

 

(Y’s acceptance was received)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

3,900

 

 

Discount Charges A/c

Dr.

 

100

 

 

To Bills Receivable A/c

 

 

4,000

 

(Y’s acceptance discount with bank)

 

 

 

 

 

 

 

 

 

Case (c)

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

Bills Receivable A/c

Dr.

 

4,000

 

 

To Y

 

 

4,000

 

(Y’s acceptance was received)

 

 

 

 

 

 

 

 

 

Z

Dr.

 

4,080

 

 

To Discount Received A/c

 

 

80

 

To Bills Receivable A/c

 

 

4,000

 

(Y’s acceptance endorsed in favour of Z and discount allowed by Z is Rs 80)

 

 

 

 

 

 

 

 

 

Case (d)

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

Bills Receivable A/c

Dr.

 

4,000

 

 

To Y

 

 

4,000

 

(Y’s acceptance was received)

 

 

 

 

 

 

 

 

 

Bills Sent for Collection A/c

Dr.

 

4,000

 

 

To Bills Receivable A/c

 

 

4,000

 

(Y’s acceptance sent to bank for collection)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

4,000

 

 

To Bills Sent for Collection A/c

 

 

4,000

 

(Y’s acceptance net on maturity)

 

 

 

 

 

 

 

 

 

Page No 16.36:

Question 13:

Ram draws a bill for ₹ 2,000 on Shyam on 15th September, 2018 for 3 months. On maturity, Shyam failed to honour th bill.
Pass the necessary Journal entries in the books of Ram and Shyam.

Answer:

Books of Ram

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2018

 

 

 

 

Sep.15

Bills Receivable A/c

Dr.

 

2,000

 

 

To Shyam

 

 

2,000

 

(Shyam’s acceptance received)

 

 

 

 

 

 

 

 

Dec.18

Shyam A/c

Dr.

 

2,000

 

 

To Bills Receivable A/c

 

 

2,000

 

(Shyam’s acceptance dishonoured)

 

 

 

 

 

 

 

 

 

Books of Shyam

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2018

 

 

 

 

Sep.15

Ram

Dr.

 

2,000

 

 

To Bills Payable A/c

 

 

2,000

 

(Bill drawn by Ram was accepted)

 

 

 

 

 

 

 

 

Dec.18

Bills Payable A/c

Dr.

 

2,000

 

 

To Ram

 

 

2,000

 

(Bills Payable dishonoured)

 

 

 

 

 

 

 

 

 



Page No 16.37:

Question 14:

On 20th March, 2019, Naresh sold goods to Kailash to the value of ₹ 1,250, taking a bill at 3 months for the amount. On maturity, the bill was dishonoured. Naresh paid ₹ 10 as noting charges. On 1st July, Kailash cleared his account by paying ₹ 1,260.
Make the entries in the books of both the parties to record the above transactions.

Answer:

Books of Naresh

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2019

 

 

 

 

Mar.20

Kailash

Dr.

 

1,250

 

 

To Sales A/c

 

 

1,250

 

(Goods sold to Kailash)

 

 

 

 

 

 

 

 

Mar.20

Bills Receivable A/c

Dr.

 

1,250

 

 

To Kailash

 

 

1,250

 

(Kailash’s acceptance was received)

 

 

 

 

 

 

 

 

Jun.23

Kailash

Dr.

 

1,260

 

 

To Bills Receivable A/c

 

 

1,250

 

To Cash A/c

 

 

10

  (Bill received from Kailash dishonoured and Rs 10 paid for Noting the bill)      
         

July 01

Cash A/c

Dr.

 

1,260

 

 

To Kailash

 

 

1,260

  (Received cash from Kailash)      

 

 

 

 

 

 

Books of Kailash

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2019

 

 

 

 

Mar.20

Purchases A/c

Dr.

 

1,250

 

 

To Naresh

 

 

1,250

 

(Goods were bought from Naresh )

 

 

 

 

 

 

 

 

Mar.20

Naresh

Dr.

 

1,250

 

 

To Bills Payable A/c

 

 

1,250

 

(Bill drawn by Naresh was accepted)

 

 

 

 

 

 

 

 

Jun.23

Bills Payable A/c

Dr.

 

1,250

 

 

Noting Charges A/c

Dr.

 

10

 

 

To Naresh

 

 

1,260

  (Bill Payable was dishonoured)      
         

July 01

Naresh

Dr.

 

1,260

 

 

To Cash A/c

 

 

1,260

 

(Paid cash to Naresh)

 

 

 

 

 

 

 

 

 

Page No 16.37:

Question 15:

On 1st January, 2019, X sold goods to Y for ₹ 25,000 and immediately received from Y ₹ 10,000 by cheque and drew a bill on Y at three months for the balance amount. Bill is accepted by Y. Bill was dishonoured on the due date and Y paid ₹ 150 as noting charges. Ten days later, Y pays the due amount to X. Pass the Journal entries in the books of both the parties.

Answer:

In the books  of X

Journal

Date

Particulars

 

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2019

 

 

 

 

 

Jan. 01

Y’s A/c

Dr.

 

25,000

 

 

  To Sales A/c

 

 

 

25,000

 

(Being goods sold to Y on credit)

 

 

 

 

 

 

 

 

 

 

Jan. 01

Bills Receivable A/c

Dr.

 

15,000

 

 

Bank A/c

Dr.

 

10,000

 

 

  To Y’s A/c

 

 

 

25,000

 

(Being bill drawn on Y for three months and part payment received)

 

 

 

 

 

 

 

 

 

 

April 04

Y’s A/c

Dr.

 

15,000

 

 

  To Bills Receivable A/c

 

 

 

15,000

 

(Being bill dishonoured by Y)

 

 

 

 

 

 

 

 

 

 

April 14

Bank A/c

Dr.

 

15,000

 

 

  To Y’s A/c

 

 

 

15,000

  (Being amount due paid by Y after 10 days)

 

 

 

 

   

 

 

 

 

 

In the books  of Y

Journal

Date

Particulars

 

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2019

 

 

 

 

 

Jan. 01

Purchases A/c

Dr.

 

25,000

 

 

  To X’s A/c

 

 

 

25,000

 

(Being goods purchased from X on credit)

 

 

 

 

 

 

 

 

 

 

Jan. 01

X’s A/c

Dr.

 

25,000

 

 

  To Bank A/c

 

 

 

10,000

 

  To Bills Payable A/c

 

 

 

15,000

 

(Being acceptance given to X and part payment given)

 

 

 

 

 

 

 

 

 

 

April 04

Bills Payable A/c

Dr.

 

15,000

 

 

Noting Charges A/c

Dr.

 

150

 

 

  To X’s A/c

 

 

 

15,000

 

  To Cash A/c

 

 

 

150

 

(Being bill dishonoured and noting charges paid)

 

 

 

 

 

 

 

 

 

 

April 14

X’s A/c

Dr.

 

15,000

 

 

  To Bank A/c

 

 

 

15,000

 

(Being due amount paid to X)

 

 

 

 

Page No 16.37:

Question 16:

On 1st July, 2019, A drew a bill for ₹ 5,000 on B payable after 3 months. A discounted it with the Bank for ₹ 4,850. On maturity, B failed to pay the amount of his acceptance and the bank had to pay ₹ 50 as noting charges.
Pass the necessary Journal entries in the books of A and B.

Answer:

Books of A

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2019

 

 

 

 

Jul.01

Bills Receivable A/c

Dr.

 

5,000

 

 

To B

 

 

5,000

 

(B’s acceptance was received)

 

 

 

 

 

 

 

 

Jul.01

Bank A/c

Dr.

 

4,850

 

 

Discount Charges A/c

Dr.

 

150

 

 

To Bills Receivable A/c

 

 

5,000

 

(B’s acceptance discounted with bank)

 

 

 

 

 

 

 

 

Oct.04

B

Dr.

 

5,050

 

 

To Bank A/c

 

 

5,050

 

(B’s acceptance became dishonoured, bank paid Noting Charges Rs 50)

 

 

 

 

 

 

 

 

 

 

Books of B

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2019

 

 

 

 

Jul.01

A

Dr.

 

5,000

 

 

To Bills Payable A/c

 

 

5,000

 

(Bill drawn by A was accepted)

 

 

 

 

 

 

 

 

Oct.04

Bills Payable A/c

Dr.

 

5,000

 

 

Noting Charges A/c

Dr.

 

50

 

 

To A

 

 

5,050

 

(Bills Payable dishonoured)

 

 

 

 

 

 

 

 

 

Page No 16.37:

Question 17:

On 15th June, 2019, Mohan sold goods to Sohan valued at ₹ 2,000. He drew a bill at 3 months for the amount and discounted the same with his bank for ₹ 1,960. On the due date the bill was dishonoured and Mohan paid to the bank the amount due plus the noting charges of ₹ 10.
Draft the Journal entries in the books of all parties.

Answer:

Books of Mohan

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2019

 

 

 

 

June 15

Sohan

Dr.

 

2,000

 

 

To Sales A/c

 

 

2,000

 

(Goods sold to Sohan)

 

 

 

 

 

 

 

 

June 15

Bills Receivable A/c

Dr.

 

2,000

 

 

To Sohan

 

 

2,000

 

(Sohan’s acceptance was received)

 

 

 

 

 

 

 

 

June 15

Bank A/c

Dr.

 

1,960

 

 

Discount Charges A/c

Dr.

 

40

 

 

To Bills Receivable A/c

 

 

2,000

 

(Sohan’s acceptance discounted with bank)

 

 

 

 

 

 

 

 

Sep.18

Sohan

Dr.

 

2,010

 

 

To Bank A/c

 

 

2,010

 

(Sohan’s acceptance became dishonoured and Bank paid Rs 10 Noting Charges)

 

 

 

 

 

 

 

 

Sep.18

Bank A/c

Dr.

 

2,010

 

 

To Cash A/c

 

 

2,010

 

(Liabilities on account bill dishonoured was discharged)

 

 

 

 

 

 

 

 

 

Books of Sohan

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2019

 

 

 

 

June 15

Purchases A/c

Dr.

 

2,000

 

 

To Mohan

 

 

2,000

 

(Goods were bought from Sohan)

 

 

 

 

 

 

 

 

June 15

Mohan

Dr.

 

2,000

 

 

To Bills Payable A/c

 

 

2,000

 

(Bills drawn by Mohan was accepted)

 

 

 

 

 

 

 

 

 Sep.18

Bills Payable A/c

Dr.

 

2,000

 

 

Noting Charges A/c

Dr.

 

10

 

 

To Mohan

 

 

2,010

 

(Bills Payable became dishonoured)

 

 

 

 

Page No 16.37:

Question 18:

On 1st March, 2019, R accepted a Bill of Exchange of ₹ 20,000 from S payable 3 months after date in full settlement of his dues. On the same day S endorsed the Bill of Exchange to T together with a cheque for ₹ 5,000 in settlement of his debt to the latter. On 2nd March, 2019, T discounted the Bill of Exchange @ 6% p.a. with his bank. On maturity the Bill of Exchange was dishonoured.
Journalise the transactions in the books of R and T.

Answer:

Books of R

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2019

 

 

 

 

Mar.01

S

Dr.

 

20,000

 

 

To Bills Payable A/c

 

 

20,000

 

(Bill drawn by S was accepted)

 

 

 

 

 

 

 

 

June 04

Bills Payable A/c

Dr.

 

20,000

 

 

To S

 

 

20,000

 

(Bills Payable dishonoured)

 

 

 

 

 

 

 

 

 

Books of T

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2019

 

 

 

 

Mar.01

Bank A/c

Dr.

 

5,000

 

 

Bills Receivable A/c

Dr.

 

20,000

 

 

To S

 

 

25,000

 

(Bill Receivable and cheque received from S)

 

 

 

 

 

 

 

 

Mar.02

Bank A/c

Dr.

 

19,700

 

 

Discount Charges A/c

Dr.

 

300

 

 

To Bills Receivable A/c

 

 

20,000

 

(R’s acceptance discounted with bank at 6% p.a. for 3 months)

 

 

 

 

 

 

 

 

June 04

S

Dr.

 

20,000

 

 

To Bank A/c

 

 

20,000

 

(Bill received from S was dishonoured)

 

 

 

 

 

 

 

 

 

Page No 16.37:

Question 19:

On 1st January, 2019, A drew a bill on B for ₹ 10,000 payable after 3 months. B accepted the bill and returned it to A. After 10 days, A endorsed the bill to his creditor C. On the due date, the bill was dishonoured and C paid ₹ 50 as noting charges.
Record the transactions in the books of A, B and C.

Answer:

Books of A

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2019

 

 

 

 

Jan. 01

Bills Receivable A/c

Dr.

 

10,000

 

 

To B

 

 

10,000

 

(B’s acceptance was received)

 

 

 

 

 

 

 

 

Jan. 11

C

Dr.

 

10,000

 

 

To Bills Receivable A/c

 

 

10,000

 

(B’s acceptance endorsed in favour of C)

 

 

 

 

 

 

 

 

April 04

B

Dr.

 

10,050

 

 

To C

 

 

10,050

 

(Bill endorsed in favour of C was dishonoured and C paid Rs 50 Noting Charges)

 

 

 

 

 

 

 

 

 

Books of B

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2019

 

 

 

 

Jan. 01

A

Dr.

 

10,000

 

 

To Bills Payable A/c

 

 

10,000

 

(Bill drawn by A was accepted )

 

 

 

 

 

 

 

 

April 04

Bills Payable A/c

Dr.

 

10,000

 

 

Noting Charges A/c

Dr.

 

50

 

 

To A

 

 

10,050

 

(Bill Payable dishonoured)

 

 

 

 

 

 

 

 

 

Books of C

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2019

 

 

 

 

Jan.11

Bills Receivable A/c

Dr.

 

10,000

 

 

To A

 

 

10,000

 

(Bill Receivable received from A)

 

 

 

 

 

 

 

 

April 04

A

Dr.

 

10,050

 

 

To Bills Receivable A/c

 

 

10,000

 

To Cash A/c

 

 

50

 

(Bill Receivable received from A became dishonoured and Noting Charge paid Rs 50)

 

 

 

 

 

 

 

 

 

Page No 16.37:

Question 20:

Y owes X ₹ 4,000. On 1st January, 2019, Y accepts a 3 months bill for ₹ 3,900 in satisfaction of his full claim. On the same date, it was endorsed by X to Z in satisfaction of his claim of ₹ 3,980. The bill is dishonoured on the due date. Give the Journal entries in the books of X.

Answer:

Books of X

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2019

 

 

 

 

Jan.01

Bills Receivable A/c

Dr.

 

3,900

 

 

Discount Allowed A/c

Dr.

 

100

 

 

To Y

 

 

4,000

 

(Y’s acceptance received in full settlement of

amount due from him and allowed with discount)

 

 

 

 

 

 

 

 

Jan.01

Z

Dr.

 

3,980

 

 

To Bills Receivable A/c

 

 

3,900

 

To Discount Received A/c

 

 

80

 

(Y’s acceptance endorsed in favour of Z

 and discount received)

 

 

 

 

 

 

 

 

Mar.04

Y

Dr.

 

4,000

 

 

Discount Received A/c                               Dr.

 

80

 

 

To Z

 

 

3,980

 

To Discount Allowed A/c

 

 

100

 

(Y’s acceptance was endorsed to Z,

now dishonoured)

 

 

 

 

Page No 16.37:

Question 21:

On 1st January, 2019, A draws a bill on B for ₹ 1,000 payable after 3 months. Immediately after its acceptance, A sends the bill to his bank for collection. On the due date, the bill was dishonoured. Record the transactions in the Journals of A and B.

Answer:

Books of A

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2019

 

 

 

 

Jan.01

Bills Receivable A/c

Dr.

 

1,000

 

 

To B

 

 

1,000

 

(B’s acceptance was received)

 

 

 

 

 

 

 

 

Jan.01

Bills Sent for Collection A/c

Dr.

 

1,000

 

 

To Bills Receivable A/c

 

 

1,000

 

(B’s acceptance sent to bank for Collection)

 

 

 

 

 

 

 

 

April 04

B

Dr.

 

1,000

 

 

To Bills Sent for Collection A/c

 

 

1,000

 

(B’s acceptance became dishonoured)

 

 

 

 

 

 

 

 

 

 

Books of B

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2019

 

 

 

 

Jan.01

A

Dr.

 

1,000

 

 

To Bills Payable A/c

 

 

1,000

 

(Bill drawn by A was accepted)

 

 

 

 

 

 

 

 

April 04

Bills Payable A/c

Dr.

 

1,000

 

 

To A

 

 

1,000

 

(Bills Payable to A became dishonoured)

 

 

 

 

 

 

 

 

 

Page No 16.37:

Question 22:

A bill for ₹ 1,000 is drawn by A on B and accepted by the latter payable at the New Delhi, Bank of India. Show what entries should be passed in the books of A under each of the following circumstances:
(a) If A retained the bill till the due date and then realized it on maturity.
(b) If A discounted it with his bank for ₹ 950.
(c) If A endorsed it to his creditor C in full settlement of his debt.
(d) If A sent it to his bank for collection.
Also, give the necessary entries in each of the cases if the bill is dishonoured.

Answer:

(a)

Books of A

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

 

Bills Receivable A/c

Dr.

 

1,000

 

 

To B

 

 

1,000

 

(B’s acceptance was received)

 

 

 

 

 

 

 

 

 

On honouring of the bill

 

 

 

 

Bank A/c

Dr.

 

1,000

 

 

To Bills Receivable A/c

 

 

1,000

 

(B’s acceptance honoured)

 

 

 

 

 

 

 

 

 

On dishonour of the bill

 

 

 

 

B

Dr.

 

1,000

 

 

To Bills Receivable A/c

 

 

1,000

 

(B’s acceptance dishonoured)

 

 

 

 

(b)

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

 

Bills Receivable A/c

Dr.

 

1,000

 

 

To B

 

 

1,000

 

(Bills Receivable received from B)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

950

 

 

Discount Charges A/c

Dr.

 

50

 

 

To Bills Receivable A/c

 

 

1,000

 

(Bill acceptance discounted with bank)

 

 

 

 

 

 

 

 

 

On dishonour of the bill

 

 

 

 

B

Dr.

 

1,000

 

 

To Bank A/c

 

 

1,000

 

(B’s acceptance dishonoured)

 

 

 

 

 

 

 

 

 

(c)

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

 

Bills Receivable A/c

Dr.

 

1,000

 

 

To B

 

 

1,000

 

(B’s acceptance was received)

 

 

 

 

 

 

 

 

 

C

Dr.

 

1,000

 

 

To Bills Receivable A/c

 

 

1,000

 

(B’s acceptance endorsed in favour of C)

 

 

 

 

 

 

 

 

 

On dishonour of the bill

 

1,000

 

 

B

Dr.

 

 

1,000

 

To C

 

 

 

 

(B’s acceptance which had transferred to C now became dishonoured)

 

 

 

 

 

 

 

 

 

(d)

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

 

Bills Receivable A/c

Dr.

 

1,000

 

 

To B

 

 

1,000

 

(B’s acceptance was received)

 

 

 

 

 

 

 

 

 

Bills Sent to Bank for Collection A/c

Dr.

 

1,000

 

 

To Bills Receivable A/c

 

 

1,000

 

(Bill Sent to bank for collection)

 

 

 

 

 

 

 

 

 

On dishonour of Bill

 

 

 

 

B

Dr.

 

1,000

 

 

To Bill Sent to Bank for Collection A/c

 

 

1,000

 

(B’s acceptance dishonoured)

 

 

 

 

 

 

 

 

 

Page No 16.37:

Question 23:

On 1st January, 2019 for goods sold, Ramesh drew a Bill of Exchange on Mahesh for ₹ 4,000, for a period of 3 months. Mahesh accepts it and returns to Ramesh. Ramesh then endorses it to Mukesh who in turn endorses it to Suresh on 1st February, 2019. The bill is then discounted by Suresh on the same date with his bank at 5% p.a. On the due date the bill is dishonoured.
Pass the necessary Journal entries in the books of all the four parties.

Answer:

Books of Ramesh

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2019

 

 

 

 

Jan.01

Mahesh

Dr.

 

4,000

 

 

To Sales A/c

 

 

4,000

 

(Goods were sold to Mahesh)

 

 

 

 

 

 

 

 

Jan.01

Bills Receivable A/c

Dr.

 

4,000

 

 

To Mahesh

 

 

4,000

 

(Mahesh’s acceptance was received)

 

 

 

 

 

 

 

 

Jan.01

Mukesh

Dr.

 

4,000

 

 

To Bills Receivable A/c

 

 

4,000

 

(Mahesh’s acceptance was endorsed in favour of Mukesh)

 

 

 

 

 

 

 

 

April 04

Mahesh

Dr.

 

4,000

 

 

To Mukesh

 

 

4,000

 

(Mahesh’s acceptance was dishonoured)

 

 

 

 

 

 

 

 

 

Books of Mahesh

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2019

 

 

 

 

Jan.01

Purchases A/c

Dr.

 

4,000

 

 

To Ramesh

 

 

4,000

 

(Goods were bought from Ramesh)

 

 

 

 

 

 

 

 

Jan.01

Ramesh

Dr.

 

4,000

 

 

To Bills Payable A/c

 

 

4,000

 

(Bill drawn by Ramesh was accepted)

 

 

 

 

 

 

 

 

April 04

Bills Payable A/c

Dr.

 

4,000

 

 

To Ramesh

 

 

4,000

 

(Bill Payable was dishonoured)

 

 

 

 

 

 

 

 

 

Books of Mukesh

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2019

 

 

 

 

Jan.01

Bills Receivable A/c

Dr.

 

4,000

 

 

To Ramesh

 

 

4,000

 

(Bill received from Ramesh)

 

 

 

 

 

 

 

 

Feb.01

Suresh

Dr.

 

4,000

 

 

To Bills Receivable A/c

 

 

4,000

 

(Bills which had received from Suresh, endorsed to Suresh)

 

 

 

 

 

 

 

 

April 04

Ramesh

Dr.

 

4,000

 

 

To Suresh

 

 

4,000

 

(Bill received from Ramesh was dishonoured)

 

 

 

 

 

 

 

 

 

Books of Suresh

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2019

 

 

 

 

Feb.01

Bills Receivable A/c

Dr.

 

4,000

 

 

To Mukesh

 

 

4,000

 

(Bill Receivable received from Mukesh)

 

 

 

 

 

 

 

 

Feb.01

Bank A/c

Dr.

 

3,967

 

 

Discount Charges A/c

Dr.

 

33

 

 

To Bills Receivable A/c

 

 

4,000

 

(Bill discount with bank at 5% p.a. for two months)

 

 

 

 

 

 

 

 

April 04

Mukesh

Dr.

 

4,000

 

 

To Bank A/c

 

 

4,000

 

(Bill received from Mukesh was dishonoured)

 

 

 

 

 

 

 

 

 



Page No 16.38:

Question 24:

A purchases goods worth ₹ 6,200 from B and gives him his acceptance for ₹ 6,000 in full satisfaction. B purchases goods worth ₹ 10,000 from C and endorses the bill to him, paying the balance by cheque. On maturity the bill is dishonoured, noting charges amounted to ₹ 100.
Give the Journal entries in the books of A, B and C.

Answer:

Books of A

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

Purchases A/c

Dr.

 

6,200

 

 

To B

 

 

6,200

 

(Goods purchased from B)

 

 

 

 

 

 

 

 

 

B

Dr.

 

6,200

 

 

To Bills Payable A/c

 

 

6,000

 

To Discount Received A/c

 

 

200

 

(Bill drawn by B accepted and discount allowed by him)

 

 

 

 

 

 

 

 

 

Bills Payable A/c

Dr.

 

6,000

 

 

Discount Received A/c

Dr.

 

200

 

 

Noting Charges A/c

Dr.

 

100

 

 

To B

 

 

6,300

 

(Bill payable dishonoured)

 

 

 

 

 

 

 

 

 

Books of B

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

A

Dr.

 

6,200

 

 

To Sales A/c

 

 

6,200

 

(Good sold to A)

 

 

 

 

 

 

 

 

 

Bills Receivable A/c

Dr.

 

6,000

 

 

Discount Allowed A/c

Dr.

 

200

 

 

To A

 

 

6,200

 

(B’s acceptance received and discount allowed)

 

 

 

 

 

 

 

 

 

Purchases A/c

Dr.

 

10,000

 

 

To C

 

 

10,000

 

(Goods bought from C)

 

 

 

 

 

 

 

 

 

C

Dr.

 

10,000

 

 

To Bills Receivable A/c

 

 

6,000

 

To Bank A/c

 

 

4,000

 

(Bills Receivable and Cheque given to C to settle due)

 

 

 

 

 

 

 

 

 

A

Dr.

 

6,300

 

 

To C

 

 

6,100

 

To Discount Allowed A/c

 

 

200

 

(Bill accepted by B was dishonoured and C paid Rs 100 as Noting Charges)

 

 

 

 

 

 

 

 

 

Books of C

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

B

Dr.

 

10,000

 

 

To Sales A/c

 

 

10,000

 

(Goods sold to B)

 

 

 

 

 

 

 

 

 

Bills Receivable A/c

Dr.

 

6,000

 

 

Bank A/c

Dr.

 

4,000

 

 

To B

 

 

10,000

 

(Bill Receivable and Cheque received from B)

 

 

 

 

 

 

 

 

 

B

Dr.

 

6,100

 

 

To Bills Receivable A/c

 

 

6,000

 

To Cash A/c

 

 

100

 

(Bills Receivable received from B dishonoured and Rs 100 paid for noting the bill)

 

 

 

 

 

 

 

 

 

Page No 16.38:

Question 25:

X sells goods for ₹ 40,000 to Y on 1st January, 2019 and on the same day draws a bill on Y at three months for the amount. Y accepts it and returns it to X, who discounted it on 4th January, 2019 with his bank at 6% p.a. The acceptance is dishonoured on the due date and the noting charges were paid by bank being ₹ 200.
On 4th April, 2019, Y accepts a new bill at three months for the amount then due to X together with interest at 12% p.a.
Make Journal entries to record these transactions in the books of X.

Answer:

X’s Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2019

 

 

 

 

 

Jan.01

Y A/c

Dr.

 

40,000

 

 

     To Sales A/c

 

 

 

40,000

 

(Goods sold on credit to Y)

 

 

 

 

 

 

 

 

 

 

Jan.01

Bills Receivable A/c

Dr.

 

40,000

 

 

   To Y A/c

 

 

 

40,000

 

(Acceptance received from Y)

 

 

 

 

 

 

 

 

 

 

Jan.04

Bank A/c

Dr.

 

39,400

 

 

Discounting Charges A/c

Dr.

 

600

 

 

      To Bills Receivable A/c

 

 

 

40,000

 

(Bill discounted at 6% p.a.)

 

 

 

 

 

 

 

 

 

 

Apr.04

Y A/c (40,000+200)

Dr.

 

40,200

 

 

    To Bank A/c

 

 

 

40,200

 

(Bill dishonoured and noting charges of Rs 200 paid by bank)

 

 

 

 

 

 

 

 

 

 

Apr.04

Y A/c

Dr.

 

1,206

 

 

    To Interest A/c

 

 

 

1,206

 

(Interest due for three months from Y on renewal of bill)

 

 

 

 

 

 

 

 

 

 

Apr.04

Bills Receivable (New) A/c (40,200+1,206)

Dr.

 

41,406

 

 

   To Y A/c

 

 

 

41,406

 

(Acceptance received from Y)

 

 

 

 

 

 

 

 

 

 

Working Notes:

WN 1: Amount of Discounting Charges=40,000×6×3100×12=Rs 200

WN 2: Amount of Interest on Renewal of Bill=40,200×12×3100×12=Rs 1,206

Page No 16.38:

Question 26:

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.

Answer:

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)

 

 

 

 

 

 

 

 

 

Page No 16.38:

Question 27:

On 15th June, 2019, X sold to Y goods to the value of ₹ 15,000 drawing upon the latter two bills, one for ₹ 10,000 payable 2 months after date and other for ₹ 5,000 payable 3 months after date, X discounted the first bill with his bank at 6% p.a. and endorsed the second bill in favour of his creditor, Z. The first bill was met on maturity but the second was dishonoured. Z paid ₹ 50 as noting charges. On 1st October, Y cleared his account to X by paying ₹ 5,100 which included ₹ 50 as interest.
Record the necessary Journal entries in the books of both X and Y.

Answer:

Books of X

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2019

 

 

 

 

June 15

Y

Dr.

 

15,000

 

 

To Sales A/c

 

 

15,000

 

(Goods were sold to Y)

 

 

 

 

 

 

 

 

June 15

Bills Receivable A/c (Bill no 1)

Dr.

 

10,000

 

 

Bills Receivable A/c (Bill no 2)

Dr.

 

5,000

 

 

To Y

 

 

15,000

 

(Y’s acceptance was received)

 

 

 

 

 

 

 

 

June 15

Bank A/c

Dr.

 

9,900

 

 

Discount Charges A/c

Dr.

 

100

 

 

To Bills Receivable A/c (Bill no 1)

 

 

10,000

 

(Bill no 1 which was issued for two months discounted at 6% p.a. for two months)

 

 

 

 

 

 

 

 

June 15

Z

Dr.

 

5,000

 

 

To Bills Receivable A/c (Bill no 2)

 

 

5,000

 

(Y’s acceptance Bill no 2 endorsed in favour of Z)

 

 

 

 

 

 

 

 

 Sep.18

Y

Dr.

 

5,050

 

 

To Z

 

 

5,050

 

(Y’s acceptance which had endorsed in favour Z dishonoured)

 

 

 

 

 

 

 

 

Oct.01

Y

Dr.

 

50

 

 

To Interest A/c

 

 

50

 

(Interest due from Y)

 

 

 

 

 

 

 

 

 

Cash A/c

Dr.

 

5,100

 

 

To Y

 

 

5,100

 

(Amount due from Y received)

 

 

 

 

 

 

 

 

 

Books of Y

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2019

 

 

 

 

June 15

Purchases A/c

Dr.

 

15,000

 

 

To X

 

 

15,000

 

(Goods were bought from X)

 

 

 

 

 

 

 

 

June 15

X

Dr.

 

15,000

 

 

To Bills Payable A/c (Bill no 1)

 

 

10,000

 

To Bills Payable A/c (Bill no 2)

 

 

5,000

 

(Bills drawn by X were accepted)

 

 

 

 

 

 

 

 

Aug.18

Bills Payable A/c (Bill no 1)

Dr.

 

10,000

 

 

To Bank A/c

 

 

10,000

 

(Payment made for bill on maturity)

 

 

 

 

 

 

 

 

 Sep.18

Bills Payable A/c (Bill no 2)

Dr.

 

5,000

 

 

Noting Charges A/c

Dr.

 

50

 

 

To X

 

 

5,050

 

(Bill dishonoured)

 

 

 

 

 

 

 

 

Oct.01

Interest A/c

Dr.

 

50

 

 

To X

 

 

50

 

(Interest due to X)

 

 

 

 

 

 

 

 

Oct.01

X

Dr.

 

5,100

 

 

To Cash A/c

 

 

5,100

 

(Payment made to X)

 

 

 

 

 

 

 

 

 

Page No 16.38:

Question 28:

X draws a bill on Y for ₹ 2,000 on 1st January, 2019, Y accepts the same and returns it to X. The bill was drawn by X in full settlement of a debt owing by Y amounted to ₹ 2,050. X discounts the bill on the same date with the Central Bank of India for ₹ 1,980. On maturity the bill was duly met by Y.
Give the entries in the books of X and Y.
Suppose the bill is dishonoured, what entries will be passed?

Answer:

Books of X

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2019

 

 

 

 

Jan.01

Bills Receivable A/c

Dr.

 

2,000

 

 

Discount Allowed A/c

Dr.

 

50

 

 

To Y

 

 

2,050

 

(Y’s acceptance was received and discount allowed)

 

 

 

 

 

 

 

 

Jan.01

Bank A/c

Dr.

 

1,980

 

 

Discount Charges A/c

Dr.

 

20

 

 

To Bills Receivable A/c

 

 

2,000

 

(Y’s acceptance was discounted with bank)

 

 

 

 

 

 

 

 

 

Books of Y.

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2019

 

 

 

 

Jan.01

X

Dr.

 

2,050

 

 

To Bills Payable A/c

 

 

2,000

 

To Discount Received A/c

 

 

50

 

(Bill drawn by X was accepted)

 

 

 

 

 

 

 

 

 

Bills Payable A/c

Dr.

 

2,000

 

 

To Bank A/c

 

 

2,000

 

(Payment made for meeting the bill)

 

 

 

 

 

 

 

 

 

Journal entries – In case bill is dishonoured

 

Books of X.

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2019

 

 

 

 

 

Jan.01

Bills Receivable A/c

Dr.

 

2,000

 

 

Discount Allowed A/c

Dr.

 

50

 

 

To Y

 

 

2,050

 

(Y’s acceptance was received and discount allowed)

 

 

 

 

 

 

 

 

Jan.01

Bank A/c

Dr.

 

1,980

 

 

Discount Charges A/c

Dr.

 

20

 

 

To Bills Receivable A/c

 

 

2,000

 

(Y’s acceptance was discounted with bank)

 

 

 

 

 

 

 

 

 

Y

Dr.

 

2,050

 

 

To Bank A/c

 

 

2,000

 

To Discount Allowed A/c

 

 

50

 

(Y’s acceptance became dishonoured)

 

 

 

 

 

 

 

 

 

Books of Y

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2019

 

 

 

 

Jan.01

X

Dr.

 

2,050

 

 

To Bills Payable A/c

 

 

2,000

 

To Discount Received A/c

 

 

50

 

(Bill drawn by X was accepted and discount received)

 

 

 

 

 

 

 

 

 

Bills Payable A/c

Dr.

 

2,000

 

 

Discount Received A/c

Dr.

 

50

 

 

To X

 

 

2,050

 

(Bill became dishonoured)

 

 

 

 

 

 

 

 

 

Page No 16.38:

Question 29:

On 1st June, 2019, A sold goods to B for ₹ 250. B gave to A his acceptance payable 1 month after date. Before maturity B requests A to renew it, which A does adding ₹ 10 to the new bill for interest.
Make the necessary Journal entries to record these transactions in the books of both A and B.

Answer:

Books of A

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2019

 

 

 

 

June 01

B

Dr.

 

250

 

 

To Sales A/c

 

 

250

 

(Goods were sold to B)

 

 

 

 

 

 

 

 

June 01

Bills Receivable A/c

Dr.

 

250

 

 

To B

 

 

250

 

(B’s acceptance was received)

 

 

 

 

 

 

 

 

July 04

B

Dr.

 

250

 

 

To Bills Receivable A/c

 

 

250

 

(B’s acceptance was cancelled)

 

 

 

 

 

 

 

 

July 04

B

Dr.

 

10

 

 

To Interest A/c

 

 

10

 

(Interest due from B on account cancelling the bill)

 

 

 

 

 

 

 

 

July 04

Bills Receivable A/c

Dr.

 

260

 

 

To B

 

 

260

 

(New bill including interest was accepted by B)

 

 

 

 

 

 

 

 

 

Books of B

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2019

 

 

 

 

June 01

Purchases A/c

Dr.

 

250

 

 

To A

 

 

250

 

(Goods were bought from A)

 

 

 

 

 

 

 

 

June 01

A

Dr.

 

250

 

 

To Bills Payable A/c

 

 

250

 

(Bills drawn by A was accepted)

 

 

 

 

 

 

 

 

July 04

Bills Payable A/c

Dr.

 

250

 

 

To A

 

 

250

 

(Bill got cancelled)

 

 

 

 

 

 

 

 

July 04

Interest A/c

Dr.

 

10

 

 

To A

 

 

10

 

(Interest due to for cancelling the bill)

 

 

 

 

 

 

 

 

July 04

A

Dr.

 

260

 

 

To Bills Payable A/c

 

 

260

 

(New bill including interest drawn by A was accepted)

 

 

 

 

 

 

 

 

 

Page No 16.38:

Question 30:

A sold goods to B on 1st September, 2018 for ₹ 16,000. B immediately accepted a 3 months bill. On the due date, B requested that the bill be renewed for a further period of 2 months. A agreed provided interest at 9% p.a. was paid immediately in cash. To this B was agreeable. The second bill was met on the due date. Give the Journal entries in the books of A.

Answer:

Books of A

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2018

 

 

 

 

Sep.01

B

Dr.

 

16,000

 

 

To Sales A/c

 

 

16,000

 

(Goods were sold to B)

 

 

 

 

 

 

 

 

Sep.01

Bills Receivable A/c

Dr.

 

16,000

 

 

To B

 

 

16,000

 

(B’s acceptance was received)

 

 

 

 

 

 

 

 

Dec.04

B

Dr.

 

16,000

 

 

To Bills Receivable A/c

 

 

16,000

 

(B’s acceptance was cancelled)

 

 

 

 

 

 

 

 

Dec.04

B

Dr.

 

240

 

 

To Interest A/c

 

 

240

 

(Interest due from at 9% for 2 months on the amount due)

 

 

 

 

Working Note: Interest = 16,000 × 9% × 2/12 = Rs 240

 

 

 

 

 

 

 

 

Dec.04

Cash A/c

Dr.

 

240

 

 

To Interest A/c

 

 

240

 

(Amount for interest ware received from B)

 

 

 

 

 

 

 

 

Dec.04

Bills Receivable A/c

Dr.

 

16,000

 

 

To B

 

 

16,000

 

(B accepted a new bill)

 

 

 

 

 

 

 

 

2019

 

 

 

 

Feb.07

Cash A/c

Dr.

 

16,000

 

 

To Bills Receivable A/c

 

 

16,000

 

(Payment received on honouring of the bill)

 

 

 

 

 

 

 

 

 

 

Books of B

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2018

 

 

 

 

Sep.01

Purchases A/c

Dr.

 

16,000

 

 

To A

 

 

16,000

 

(Goods were bought from A)

 

 

 

 

 

 

 

 

Sep.01

A

Dr.

 

16,000

 

 

To Bills Payable A/c

 

 

16,000

 

(Bills drawn by A was accepted)

 

 

 

 

 

 

 

 

Dec.04

Bill Payable A/c

Dr.

 

16,000

 

 

To A

 

 

16,000

 

(Bill got cancelled due to inability to pay)

 

 

 

 

 

 

 

 

Dec.04

Interest A/c

Dr.

 

240

 

 

To A

 

 

240

 

(Interest due to A at 9% p.a. for 2 months)

 

 

 

 

 

 

 

 

Dec.04

A

Dr.

 

240

 

 

To Cash A/c

 

 

240

 

(Payment for interest to A)

 

 

 

 

 

 

 

 

Dec.04

A

Dr.

 

16,000

 

 

To Bills Payable A/c

 

 

16,000

 

(New bill drawn by A was accepted)

 

 

 

2019

 

 

 

 

Feb.04

Bills Payable A/c

Dr.

 

16,000

 

 

To Cash A/c

 

 

16,000

 

(Payment of the bill made on due date)

 

 

 

 

 

 

 

 

 

Page No 16.38:

Question 31:

On 1st May, 2019 Merchant & Co. sold goods to AB & Co. valued at ₹ 500 and drew upon them a bill at 3 months for the amount. AB & Co. accepted the draft on presentation. When the bill was about to mature. AB & Co. expressed their inability to meet it, and offered to pay Merchant & Co. ₹ 200 in cash and to accept a fresh bill for the balance plus interest at 6% p.a. for 3 months. Merchant & Co. agreed to the proposal and bill was renewed. On maturity, the bill was duly met.
Make the entries in the books of both the parties to record the above transactions.

Answer:

Books of Merchant & Co.

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2019

 

 

 

 

May 01

AB & Co

Dr.

 

500

 

 

To Sales A/c

 

 

500

 

(Goods were sold to AB & Co)

 

 

 

 

 

 

 

 

May 01

Bills Receivable A/c

Dr.

 

500

 

 

To AB & Co

 

 

500

 

(AB & Co’s acceptance was received)

 

 

 

 

 

 

 

 

Aug.04

AB & Co

Dr.

 

500

 

 

To Bills Receivable A/c

 

 

500

 

(AB & Co’s acceptance was cancelled)

 

 

 

 

 

 

 

 

Aug.04

Cash A/c

Dr.

 

200

 

 

To AB & Co

 

 

200

 

(Cash received from AB & Co)

 

 

 

 

 

 

 

 

Aug.04

AB & Co

 

4.50

 

 

To Interest A/c

 

 

4.50

 

(Interest-due from AB & Co at 6% p.a. for 3 months)

 

 

 

 

Working Note: 300 × 6% × 3/12 = Rs 4.50

 

 

 

 

 

 

 

 

Aug.04

Bills Receivable A/c

Dr.

 

304.50

 

 

To AB & Co

 

 

304.50

 

(AB & Co’s acceptance was received including the interest for 3 months)

 

 

 

 

 

 

304.50

 

Nov.07

Cash A/c

Dr.

 

 

304.50

 

To Bills Receivable A/c

 

 

 

 

(Payment received on maturity the bill)

 

 

 

 

 

 

 

 

 

Books of AB & Co

Journal

Date

Particulars

L.F.

Debit

Amount

(₹)

Credit

Amount

(₹)

2019

 

 

 

 

May 01

Purchases A/c

Dr.

 

500

 

 

To Merchant & Co

 

 

500

 

(Goods were bought from Merchant & Co)

 

 

 

 

 

 

 

 

May 01

Merchant & Co

Dr.

 

500

 

 

To Bills Payable A/c

 

 

500

 

(Bill drawn by Merchant & Co was accepted)

 

 

 

 

 

 

 

 

Aug.04

Bills Payable A/c

Dr.

 

500

 

 

To Merchant & Co

 

 

500

 

(Bill got cancelled)

 

 

 

 

 

 

 

 

Aug.04

Merchant & Co

Dr.

 

200

 

 

To Cash A/c

 

 

200

 

(Cash paid to Merchant & Co)

 

 

 

 

 

 

 

 

Aug.04

Interest A/c

Dr.

 

4.50

 

 

To Merchant & Co

 

 

4.50

 

(Interest due to Merchant & Co at 6% p.a. for 3 months on the amount due)

 

 

 

 

 

 

 

 

Aug.04

Merchant & Co

Dr.

 

304.50

 

 

To Bill Payable A/c

 

 

304.50

 

(New bill drawn by Merchant & Co was accepted)

 

 

 

 

 

 

 

 

Nov.07

Bills Payable A/c

Dr.

 

304.50

 

 

To Cash A/c

 

 

304.50

 

(Cash paid for honouring the bill)

 

 

 

 

 

 

 

 

 



Page No 16.39:

Question 32:

A owed B ₹ 400. A accepted a Bill of Exchange at 3 months for this amount which B discounted for ₹ 380.
Give the necessary Journal entries in the books of A and B if this bill is:
(a) dishonoured on the due date;
(b) met at maturity and
(c) retired under rebate at 6% p.a. 2 months before its maturity.

Answer:

Case (a) If the bill is dishonoured

Books of B

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

Bills Receivable A/c

Dr.

 

400

 

 

To A

 

 

400

 

(A’s acceptance was received)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

380

 

 

Discount Charges A/c

Dr.

 

20

 

 

To Bills Receivable A/c

 

 

400

 

(A’s acceptance was discounted with bank)

 

 

 

 

 

 

 

 

 

A

Dr.

 

400

 

 

To Bank A/c

 

 

400

 

(A’s acceptance dishonoured)

 

 

 

 

 

 

 

 

 

 

Books of A

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

B

Dr.

 

400

 

 

To Bills Payable A/c

 

 

400

 

(Bill drawn by A was accepted)

 

 

 

 

 

 

 

 

 

Bills Payable A/c

Dr.

 

400

 

 

To B

 

 

400

 

(Bill drawn by B was dishonoured on maturity)

 

 

 

 

 

 

 

 

 

 

Case (b) The bills met at maturity

Books of B

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

Bills Receivable A/c

Dr.

 

400

 

 

To A

 

 

400

 

(A’s acceptance was received)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr

 

380

 

 

Discount Charges A/c

Dr.

 

20

 

 

To Bills Receivable A/c

 

 

400

 

(A’s acceptance was discounted with bank)

 

 

 

 

 

 

 

 

 

Books of A

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

B

Dr.

 

400

 

 

To Bills Payable A/c

 

 

400

 

(Bills drawn by A was accepted)

 

 

 

 

 

 

 

 

 

Bill Payable A/c

Dr.

 

400

 

 

To Cash A/c

 

 

400

 

(Payment made meeting the bill on maturity)

 

 

 

 

 

 

 

 

 

Case (c) If bill is retired under rebate at 6% p.a. 2 months before its maturity

Books of B

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

Bills Receivable A/c

Dr.

 

400

 

 

To A

 

 

400

 

(A’s acceptance was received)

 

 

 

 

 

 

 

 

 

Cash A/c

Dr.

 

396

 

 

Rebate A/c

Dr.

 

4

 

 

To Bills Receivable A/c

 

 

400

 

(Payment received 2 months before its maturity and gave rebate)

 

 

 

 

 

 

 

 

 

Working Note:

Books of A

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

B

Dr.

 

400

 

 

To Bills Payable A/c

 

 

400

 

(Bill drawn by B was accepted)

 

 

 

 

 

 

 

 

 

Bills Payable A/c

Dr.

 

400

 

 

To Cash A/c

 

 

396

 

To Rebate A/c

 

 

4

 

(Bill discharge before 2 months of its due date and rebate was received)

 

 

 

 

 

 

 

 

 

Page No 16.39:

Question 33:

Amar sells goods to Bhola for ₹ 10,000 and draws upon him a bill for the amount payable 3 months after date. The bill is accepted by Bhola. Amar discounts the bill with his bankers at a discount of ₹ 150 inclusive of all charges. Bhola fails to meet this bill on maturity. Amar pays off his banker and his expenses amounting to ₹ 100. Bhola gives a fresh bill, 2 months' date to Amar for ₹ 10,250, which he met at maturity.
Show the necessary Journal entries in Amar's books.

Answer:

Books of Amar

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

Bhola

Dr.

 

10,000

 

 

To Sales A/c

 

 

10,000

 

(Goods were sold to Bhola)

 

 

 

 

 

 

 

 

 

Bills Receivable A/c

Dr.

 

10,000

 

 

To Bhola

 

 

10,000

 

(Bhola’s acceptance was received)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

9,850

 

 

Discount Charges A/c

Dr.

 

150

 

 

 To Bills Receivable A/c

 

 

10,000

 

(Bhola’s acceptance discounted with bank)

 

 

 

 

 

 

 

 

 

Bhola

Dr.

 

10,100

 

 

To Bank A/c

 

 

10,100

 

(Bhola’s acceptance declared dishonoured)

 

 

 

 

 

 

 

 

 

Bank A/c

Dr.

 

10,100

 

 

To Cash A/c

 

 

10,100

 

(Payment made to bank with noting charges for dishonoring of the bill)

 

 

 

 

 

 

 

 

 

Bhola

Dr.

 

150

 

 

To Interest A/c

 

 

150

 

(Interest due from Bhola for on account of bill dishonor)

 

 

 

 

 

 

 

 

 

Bills Receivable A/c

Dr.

 

10,250

 

   To Bhola     10,250
  (New bill accepted by Bhola for the amount due including rating charges and interest)      
         
  Cash A/c Dr.   10,250  

 

To Bills Receivable A/c

 

 

10,250

 

(Amount received)

 

 

 

 

 

 

 

 

 

Page No 16.39:

Question 34:

Give the Journal entries for the following:
(a) B's acceptance to us for ₹ 1,000 due this day, renewed at his request for 3 months with interest @ 6% p.a.
(b) Our bill to Chandra for ₹ 5,000 renewed for 2 months with interest @ 6% p.a.
(c) B's acceptance of ₹ 3,000 is discharged on his paying us cash ₹ 1,000 and accepting a fresh bill for the balance with interest ₹ 100.

Answer:

(a)

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

B

Dr.

 

1,000

 

 

To Bills Receivable A/c

 

 

1,000

 

(B’s acceptance was cancelled)

 

 

 

 

 

 

 

 

 

B

Dr.

 

15

 

 

To Interest A/c

 

 

15

 

(Interest due from B)

 

 

 

 

 

 

 

 

 

Bills Receivable A/c

Dr.

 

1,015

 

 

To B

 

 

1,015

 

(New bill was accepted by B including interest)

 

 

 

 

 

 

 

 

 

Working Note:

(b)

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

Bills Payable A/c

Dr.

 

5,000

 

 

To C. Chandra

 

 

5,000

 

(Bill Payable was cancelled)

 

 

 

 

 

 

 

 

 

Interest A/c

Dr.

 

50

 

 

To C. Chandra

 

 

50

 

(Interest at 6% p.a. for 2 month due to C. Chandra)

 

 

 

 

 

 

 

 

 

C. Chandra

Dr.

 

5,050

 

 

To Bills Payable A/c

 

 

5,050

 

(New bill drawn by C. Chandra was accepted)

 

 

 

 

 

 

 

 

 

Working Note:

(c)

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

B

Dr.

 

3,000

 

 

To Bills Receivable A/c

 

 

3,000

 

(B got cancelled his acceptance)

 

 

 

 

 

 

 

 

 

Cash A/c

Dr.

 

1,000

 

 

To B

 

 

1,000

 

(Cash received from B)

 

 

 

 

 

 

 

 

 

B

Dr.

 

100

 

 

To Interest A/c

 

 

100

 

(Interest due from B)

 

 

 

 

 

 

 

 

 

Bills Receivable A/c

Dr.

 

2,100

 

 

To B

 

 

2,100

 

(New bill accepted by B for balance amount including interest)

 

 

 

 

 

 

 

 

 

Page No 16.39:

Question 35:

Leena sold goods to Meena on 1st March, 2009 for ₹ 68,000 and drew two Bills of Exchange of the equal amount upon Meena payable after three months. Leena immediately discounted the first bill with her bank at 12% p.a. The bill was dishonoured by Meena and Bank paid ₹ 55 as noting charges.
The second bill was retired on 4th May, 2009 under a rebate of 6% p.a. with mutual agreement.
Journalise the above in the books of Leena and Meena.

Answer:

Books of Leena

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

2009

 

 

 

 

 

Mar.01

Meena

Dr.

 

68,000

 

 

 

To Sales A/c

 

 

68,000

 

 

(Goods were sold to Meena)

 

 

 

 

 

 

 

 

 

 

Mar.01

Bills Receivable A/c (Bill no. 1)

Dr.

 

34,000

 

 

 

Bills Receivable A/c (Bill no. 2)

Dr.

 

34,000

 

 

 

To Meena

 

 

68,000

 

 

(Meena’s acceptance were received)

 

 

 

 

 

 

 

 

 

 

Mar.01

Bank A/c

Dr.

 

32,980

 

 

 

Discount Charges A/c

Dr.

 

1,020

 

 

 

To Bills Receivable A/c (Bill no. 01)

 

 

34,000

 

 

(Bill no. 1 discount with bank at 12% p.a. for 3 months)

 

 

 

 

 

 

 

 

 

 

 

Working Note: Interest = 34,000 × 12% × 3/12

 

 

 

 

 

 

 

 

 

 

May 04

Cash A/c

Dr.

 

33,830

 

 

 

Rebate A/c

Dr.

 

170

 

 

 

To Bills Receivable A/c (Bill no. 2)

 

 

34,000

 

 

(Bill no. 2 retired before one month under a rebate at 6% p.a.)

 

 

 

 

 

 

 

 

 

 

 

Working Note: Rebate = 34,000 × 6% × 1/12

 

 

 

 

 

 

 

 

 

 

June 04

Meena

Dr.

 

34,055

 

 

 

To Bank A/c

 

 

34,055

 

 

(Bill no. 1 which was discounted with bank proved dishonoured)

 

 

 

 

 

 

 

 

 

 

 

 

Books of Meena

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

2009

 

 

 

 

Mar.01

Purchases A/c

Dr.

 

68,000

 

 

To Leena

 

 

68,000

 

(Goods were bought from Leena)

 

 

 

 

 

 

 

 

Mar.01

Leena

Dr.

 

68,000

 

 

To Bills Payable A/c (Bill no. 1)

 

 

34,000

 

To Bills Payable A/c (Bill no. 2)

 

 

34,000

 

(Bills drawn by Leena were accepted)

 

 

 

 

 

 

 

 

May 04

Bills Payable A/c (Bill no. 2)

Dr.

 

34,000

 

 

To Cash A/c

 

 

33,830

 

To Rebate A/c

 

 

170

 

(Bill no. 2 discharge one month before due and received)

 

 

 

 

 

 

 

 

June 04

Bills Payable A/c (Bill no. 1)

Dr.

 

34,000

 

 

Noting Charges A/c

Dr.

 

55

 

 

To Leena

 

 

34,055

 

(Bill no. 2 was dishonoured due to non payment)

 

 

 

 

 

 

 

 

Page No 16.39:

Question 36:

How will you record the following transactions in the books Kapadia?
(a) A bill received from Dalpat for ₹ 1,000 has to be renewed, Dalpat agrees to pay ₹ 20 as interest.
(b) Swamy's bill for ₹ 800 endorsed in favour of Ghosh dishonoured, Ghosh pays ₹ 10 as noting charges. Swamy pays ₹ 300 immediately and agrees to accept a new bill for 3 months for the balance together with interest at 6% p.a. Ghosh's Account is settled by cheque.

Answer:

(a)

Books of Kapadia

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

Dalpat

Dr.

 

1,000

 

 

To Bills Receivable A/c

 

 

1,000

 

(Dalpat acceptance cancelled)

 

 

 

 

 

 

 

 

 

Dalpat

Dr.

 

20

 

 

To Interest A/c

 

 

20

 

(Interest due from Dalpat)

 

 

 

 

 

 

 

 

 

Cash A/c

Dr.

 

20

 

 

To Dalpat

 

 

20

 

(Cash received from Dalpat for interest on renewal of the bill)

 

 

 

 

 

 

 

 

 

Bills Receivable A/c

Dr.

 

1,000

 

 

To Dalpat

 

 

1,000

 

(New bill accepted by Dalpat)

 

 

 

 

 

 

 

 

(b)

Books of Kapadia

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

 

Swamy

Dr.

 

810

 

 

To Ghosh

 

 

810

 

(Swamy’s acceptance dishonoured and Ghosh paid Rs 10 as Noting Charges)

 

 

 

 

 

 

 

 

 

Cash A/c

Dr.

 

300

 

 

To Swamy

 

 

300

 

(Cash received from Swamy)

 

 

 

 

 

 

 

 

 

Swamy

Dr.

 

7.65

 

 

To Interest A/c

 

 

7.65

 

(Interest due from Swamy)

 

 

 

 

Working Note: Interest = 510 × 6% × 3/12 = Rs 7.65

 

 

 

 

 

 

 

 

 

Bills Receivable A/c

Dr.

 

517.65

 

 

To Swamy

 

 

517.65

 

(Swamy’s acceptance received for the balance due including interest)

 

 

 

 

 

 

 

 

 

Ghosh

Dr.

 

810

 

 

To Bank A/c

 

 

810

 

(Amount due to Ghosh was paid through cheque)

 

 

 

 

 

 

 

 

 

Page No 16.39:

Question 37:

Y purchased goods for ₹ 6,000 on 1st June, 2011 from X and on the same date accepted a bill payable after three months. 3 days later, X endorsed the bill to Z. On maturity, the bill was dishonoured for non-payment and Z had to pay ₹ 50 as noting charges. Two days after the dishonour of bill, Y paid ₹ 2,000 to X and requested him to draw a second bill for the balance plus ₹ 90 for the amount of interest, payable after two months. X accepted the proposal and draws the bill on Y, which was accepted by Y and was duly met on maturity.
Pass Journal entries for the above transactions in the books of X.

Answer:

Books of X

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

2011

 

 

 

 

June 01

Y

Dr.

 

6,000

 

 

To Sales A/c

 

 

6,000

 

(Goods sold to Y)

 

 

 

 

 

 

 

 

June 01

Bills Receivable A/c (Bill no. 1)

Dr.

 

6,000

 

 

To Y

 

 

6,000

 

(Y’s acceptance received)

 

 

 

 

 

 

 

 

June 04

Z

Dr.

 

6,000

 

 

To Bills Receivable A/c (Bill no. 1)

 

 

6,000

 

(Bill endorsed in favour of Z)

 

 

 

 

 

 

 

 

Sept.04

Y

Dr.

 

6,050

 

 

To Z

 

 

6,050

 

(Endorsed bill get dishonoured and noting charges were paid)

 

 

 

 

 

 

 

 

Sept.06

Cash A/c

Dr.

 

2,000

 

 

Bills Receivable A/c (Bill no. 2) (4,050 + 90)

Dr.

 

4,140

 

 

To Y

 

 

6,050

 

To Interest A/c

 

 

90

 

(Cash of Rs 2,000 was received and for the remaining balance new

Bill issued including interest of Rs 90)

 

 

 

 

 

 

 

 

Nov.09

Cash A/c

Dr.

 

4,140

 

 

To Bills Receivable A/c (Bill no. 2)

 

 

4,140

 

(Bill met on the due date)

 

 

 

 

 

 

 

 

 



Page No 16.40:

Question 38:

On 1st January, 2008, A sold goods to B for ₹ 1,00,000 received ₹ 25,000 in cash and drew two bills, first ₹ 45,000 and second for ₹ 30,000 of two months each. Both bills were duly accepted by B. First bill was endorsed to C in settlement of his account of ₹ 45,000 and second bill was discounted from the bank at the rate of 12% p.a. On the due date of these bills, both bills were dishonoured, C has paid ₹ 100 and bank has paid ₹ 80 as noting charges.
Pass Journal entries in the books of A, B and C.

Answer:

Books of A

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

2008

 

 

 

 

Jan.01

B

Dr.

 

1,00,000

 

 

To Sales A/c

 

 

1,00,000

 

(Goods were sold to B)

 

 

 

 

 

 

 

 

Jan.01

Cash A/c

Dr.

 

25,000

 

 

Bills Receivable A/c (Bill no. 1)

Dr.

 

45,000

 

 

Bills Receivable A/c (Bill no. 2)

Dr.

 

30,000

 

 

To B

 

 

1,00,000

 

(Cash and acceptances were received from B)

 

 

 

 

 

 

 

 

Jan.01

C

Dr.

 

45,000

 

 

To Bill Receivable A/c (Bill no. 1)

 

 

45,000

 

(Bill endorsed in favour of C)

 

 

 

 

 

 

 

 

Jan.01

Bank A/c

Dr.

 

29,400

 

 

Discount Charges A/c

Dr.

 

600

 

 

To Bills Receivable (Bill no. 2)

 

 

30,000

 

(Bill no. 2 discounted with bank at 12% p.a. for 2 months)

 

 

 

 

Working Note: Discount Charges = 30,000 × 12% × 2/12

 

 

 

 

 

 

 

 

Mar.04

B

Dr.

 

45,100

 

 

To C

 

 

45,100

 

(B’s acceptance which had endorsed to C was dishonoured and C paid Rs 100 as noting charges)

 

 

 

 

 

 

 

 

Mar.04

B

Dr.

 

30,080

 

 

To Bank A/c

 

 

30,080

 

(B’s acceptance which had discounted with bank was dishonoured and bank paid Rs 80 as noting charges)

 

 

 

 

 

 

 

 

 

Journal

In the Books of B

Date

Particulars

L.F.

Debit

Amount

(Rs)

Credit

Amount

(Rs)

2008

 

 

 

 

 

Jan. 01

Purchases A/c

Dr.

 

1,00,000

 

 

  To A

 

 

 

1,00,000

 

(Goods purchased from A)

 

 

 

 

 

 

 

 

 

 

Jan. 01

A

Dr.

 

1,00,000

 

 

  To Cash A/c

 

 

 

25,000

 

  To Bills Payable A/c (1)

 

 

 

45,000

 

  To Bills Payable A/c (2)

 

 

 

30,000

 

(Cash and bills given to A)

 

 

 

 

 

 

 

 

 

 

March 04

Bills Payable A/c (1)

Dr.

 

45,000

 

 

Bills Payable A/c (2)

Dr.

 

30,000

 

 

Noting Charges A/c

Dr.

 

180

 

 

   To A

 

 

 

75,180

 

(Bills dishonoured)

 

 

 

 

 

 

 

 

 

 

Journal

In the Books of C

Date

Particulars

L.F.

Debit

Amount

(Rs)

Credit

Amount

(Rs)

2008

 

 

 

 

 

Jan. 01

Bills Receivable A/c (1)

Dr.

 

45,000

 

 

  To A

 

 

 

45,000

 

(Bill received from A)

 

 

 

 

 

 

 

 

 

 

March 04

A

Dr.

 

45,100

 

 

 To Bills Receivable A/c (1)

 

 

 

45,000

 

  To Cash A/c

 

 

 

100

 

(Bill dishonoured on due date)

 

 

 

 

Page No 16.40:

Question 39:

Amar sells goods to Bhola for â‚¹ 10,000 plus CGST and SGST @ 9% each. He receives the GST amount in cash and draws upon Bhola a bill for the balance amount payable 3 months after date. The bill is accepted by Bhola. Amar discounts the bill with his bank at a discount of â‚¹ 150 inclusive of all charges. Bhola fails to meet this bill on maturity. Amar pays off his bank and his expenses amounting to â‚¹ 100. Bhola gives a fresh bill of 2 months' date to Amar for ₹ 10,250, which he meets at maturity. Show necessary Journal entries in Amar's books. 

Answer:

Journal
in the books of Amar (Drawer)
Date
Particulars
L.F.
Debit
Amount
(₹)
Credit
Amount
(₹)
 
 
 
 
 
 
 
Bhola’s A/c
Dr.
 
11,800
 
 
  To Sales A/c
 
 
 
10,000
 
  To Output CGST A/c
 
 
 
900
 
  To Output SGST A/c
 
 
 
900
 
(Goods sold to Bhola)
 
 
 
 
 
 
 
 
 
 
 
Cash A/c
Dr.
 
1,800
 
 
Bills Receivable A/c
Dr.
 
10,000
 
 
  To Bhola’s A/c
 
 
 
11,800
 
(Cash and bill received)
 
 
 
 
 
 
 
 
 
 
 
Bank A/c
Dr.
 
9,850
 
 
Discounting Charges A/c
Dr.
 
150
 
 
  To Bills Receivable A/c
 
 
 
10,000
 
(Bill discounted)
 
 
 
 
 
 
 
 
 
 
 
Bhola’s A/c
Dr.
 
10,100
 
 
  To Bank A/c
 
 
 
10,100
 
(Bill dishonoured)
 
 
 
 
 
 
 
 
 
 
 
Bhola’s A/c
Dr.
 
150
 
 
  To Interest A/c
 
 
 
150
 
(Interest due)
 
 
 
 
 
 
 
 
 
 
 
Bills Receivable A/c
Dr.
 
10,250
 
 
  To Bhola’s A/c
 
 
 
10,250
 
(New bill received)
 
 
 
 
 
 
 
 
 
 
 
Cash A/c
Dr.
 
10,250
 
 
  To Bills Receivable A/c
 
 
 
10,250
 
(New bill met on maturity)
 
 
 
 
 
 
 
 
 
 
 
Journal
in the books of Bhola (Drawee)
Date
Particulars
L.F.
Debit
Amount
(₹)
Credit
Amount
(₹)
 
 
 
 
 
 
 
Purchases A/c
Dr.
 
10,000
 
 
Input CGST A/c
Dr.
 
900
 
 
Input SGST A/c
Dr.
 
900
 
 
  To Amar’s A/c
 
 
 
11,800
 
(Goods purchased from Amar)
 
 
 
 
 
 
 
 
 
 
 
Amar’s A/c
Dr.
 
11,800
 
 
  To Bills Payable A/c
Dr.
 
 
10,000
 
  To Cash A/c
 
 
 
1,800
 
(Cash paid and bill accepted)
 
 
 
 
 
 
 
 
 
 
 
Bills Payable A/c
Dr.
 
10,000
 
 
 Noting Charges A/c
Dr.
 
100
 
 
  To Cash A/c
 
 
 
10,100
 
(Bill dishonoured)
 
 
 
 
 
 
 
 
 
 
 
Interest A/c
Dr.
 
150
 
 
  To Amar’s A/c
 
 
 
150
 
(Interest due)
 
 
 
 
 
 
 
 
 
 
 
Amar’s A/c
Dr.
 
10,250
 
 
  To Bills Payable A/c
 
 
 
10,250
 
(New bill accepted)
 
 
 
 
 
 
 
 
 
 
 
Bills Payable A/c
Dr.
 
10,250
 
 
  To Cash A/c
 
 
 
10,250
 
(New bill met on maturity)
 
 
 
 



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