NCERT solutions class 11 Accountancy chapter 8 Bill of Exchange
Chapter 8 Bill of Exchange Class 11 is a crucial topic of accountancy and must be dealt with seriousness to do well in the exams. Students struggling with the chapter must not worry anymore.
SimplyAcad has prepared the best NCERT Solutions for the Chapter 8 Bill of Exchange to help students understand the concepts properly. The solutions are carefully organised to avoid any possible hassles for students. These study materials will allow you to solve complex problems of the chapter easily. Access the answers by scrolling down and make sure to revise regularly
NCERT Solutions For Accountancy Chapter 8 Bill of Exchange Class 11
Short Answers for Class 11 Bill of Exchange Chapter 8
- Name any two types of commonly used negotiable instruments.
- Promissory Notes
- Cheques
- Write two points of distinction between bills of exchange and promissory note.
Basis of Distinction | Bills of Exchange | Promissory Note |
Drawn by | Creditor | Debtor |
Parties Involved | Three parties are involved which are drawer, payee and drawee. | It involves two parties which are payee and drawer/maker. |
- State any four essential features of a bill of exchange.
The following four features are considered essential for a bill of exchange:
- A bill of exchange must be in writing
- A bill of exchange should contain an unconditional order to pay.
- Drawer of the bill must sign the bill.
- The amount and the expiry date should be mentioned specifically in the bill of exchange.
- State the three parties involved in a bill of exchange.
A bill of exchange involves three parties, and they are the following:
- Drawer/Maker/Holder – Responsible for issuing the bill
- Payee/Holder – The person who will receive the payment
- Drawee/Acceptor – One who has to accept the bill
- What is meant by maturity of a bill of exchange?
The date when the bill is ready for payment is called the maturity of a bill. The date of maturity is arrived at after adding 3 days of grace to the due date as per the terms of the bill. The concept of the due date will further help you understand the maturity of a bill. It consists of the following terms:
- Bill at Sight: This type of bill is due as and when it is presented.
- Bill after Sight: In this type of bill, the due date is calculated from the date the debtor accepts the bill plus the period as per the terms of the bill. The maturity date is calculated by adding 3 days to the due date.
- Bill after Date: In this type of bill, the due date is calculated from the date on which the bill is drawn plus the period as per the terms of the bill. The maturity date is calculated by adding 3 days to the due date.
Exceptions to maturity of the bill: If the due date of the bill falls on a national holiday (like Independence Day) or on a Sunday, the bill due date is counted one day prior to the original date, and if the due date falls on an emergency holiday (like a nationwide strike), the bill due date is counted one day later.
- What is meant by dishonour of a bill of exchange?
The situation when the drawee of the bill of exchange is unable to process the payment as per the maturity date of the bill is known as dishonour of the bill of exchange. With this, the liability of the acceptor is re-established, and he/she becomes a debtor again. To reflect the changes, the receipt of the bill of exchange should be reversed.
- Name the parties to a promissory note
Two parties are involved in a promissory note:
- Maker/Drawer, Also known as promisor, is the one who is the maker of the note and is the one responsible for paying the sum as mentioned on the promissory note.
- Promisee or Payee is the one who will be receiving the payment.
- What is meant by acceptance of a bill of exchange?
A bill of exchange drawn by a creditor upon a debtor involves an unconditional order to pay in writing, but the same must be accepted by the debtor or someone on his/her behalf in order to make the debtor liable to pay. It is a draft before acceptance by the debtor. So once the debtor has written the term “accepted” and signed the document, it is then known as a bill of exchange, and this process is called acceptance of a bill of exchange.
- What is noting of a bill of exchange?
A bill of exchange is said to be dishonoured when the drawee is unable to make the payment upon presenting the bill by the drawer. To retain legal evidence of the dishonoured bill, the notary public needs to record it. The charges levied by the notary public for recording the failed transaction are called noting charges, and the process of recording is referred to as noting.
- What is meant by renewal of a bill of exchange?
A bill of exchange is said to be renewed when the debtor/acceptor has insufficient funds to pay the drawer and hence requests for a time extension in order to make payment. A new bill of exchange is drawn on being agreed upon by the drawer of the bill. This process is called the renewal of the bill of exchange. The bill gets renewed only if the drawee agrees to pay a certain rate of interest as decided for the period of extension.
- Give the performa of a Bills Receivable Book.
Serial Number of Bill | Date Received | Date of Bill | Received From Whom | Drawer | Acceptor | Where payable | Term | Due date | Ledger Folio | Amount | Cash Book Folio | Remarks |
- Give the performa of a Bills Payable Book.
Serial Number of Bill | Date of Bill | Given To Whom | Drawer | Payee | Payable Where | Term of Bill | Due Date | Ledger Folio | Amount Paid | Date | Cash Book Folio | Remarks |
- What is retirement of a bill of exchange?
When a drawee of a bill of exchange has adequate funds and requests the drawer to accept the payment before the maturity date, and once the drawer accepts, it is known as the retirement of the bill of exchange as the bill of exchange is closed before maturity.
- Give the meaning of rebate.
The discount received by a drawee from the holder on advance payment of the bill of exchange to the holder (before the due date or maturity date) is known as a rebate.
- Give the performa of a Bill of Exchange.
The following is a performa of bill of exchange
Mr. Y (Drawer)
₹ 10,000 |
Bengaluru
July 10, 2019 |
|
One month after the date, pay to me, or my order the sum of rupees ten thousand only, for the value received | ||
Accepted
(Signed) To Mr. W (Drawee) July 10, 2019 J.P Nagar, Bengaluru 560078 |
(Signed)
Mr. Y Brigade Road, Bengaluru 560001 |
These were some important short answer type questions from Chapter 8 Bill of Exchange.
Long Answers for Class 11 Bill of Exchange Chapter 8
- A bill of exchange must contain an unconditional promise to pay. Do you agree with a statement?
The Negotiable Instrument Act, 1881 defines a bill of exchange as, “A bill of exchange is defined as an instrument in writing, containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument.”
One of the most significant feature of a negotiable instrument is an unconditional order to pay. The drawee cannot add any conditions such as payment will be done only if debtors pay or business makes profit.
A bill of exchange must contain an unconditional order to pay for the following reasons:
- To avoid any kind of conflict at the time of payment
- To provide security to the creditor and also bind the debtor to pay the amount.
- To comply with The Negotiable Instruments Act, 1881.
2. Briefly explain the effects of dishonour and noting of a bill of exchange.
When the drawee of the bill of exchange is unable to complete the payment on the date of maturity of the bill, it is known as dishonour of the bill of exchange. With this liability of the acceptor is re-established, and he/she becomes a debtor again. To reflect the changes, the receipt of the bill of exchange should be reversed.
The following entries will be made in books of holder/drawer (Nonpayment of noting charges):
Drawee A/c | Dr. | |
To Bills Receivable A/c | ||
(Bill of exchange dishonoured) |
Entry in the books of drawee:
Bills Payable A/c | Dr. | |
To Drawer | ||
(Bill of exchange dishonoured) |
Notary public charges a fee for keeping proof of a dishonoured bill. These charges are borne by the drawee of the bill.
The following pieces of information are noted by the notary public.
- Amount and date of the bill
- Possible Reason for dishonouring of bill
- Fees charged for Noting
Entries of noting charges in the books of drawer (Payment done for noting charges):
Drawee | Dr. | |
To Bills Receivable A/c | ||
To Cash A/c (Noting charges) | ||
(Bill of exchange dishonoured and Noting charges paid) |
In the books of drawee:
Bills Payable A/c | Dr. | |
Noting charges A/c | Dr. | |
To Drawer | ||
(Bill of exchange dishonoured and Noting charges due) |
- Explain briefly the procedure of calculating the date of maturity of a bill of exchange? Give example.
The following steps discuss the procedure for calculating the bill of exchange maturity date:
- Determine the due date of the bill as per the terms of bills of exchange.
- Grace period of three days must be added to the due date to arrive at the maturity date.
For e.g., a bill having a due date of 30 days (a month) is drawn on 1st August, then the due date is 1st September. Adding 3 grace periods, we arrive at bill maturity and payment due date, which is on 4th October.
The calculation of days of the grace period depends on these situations:
- Known Holidays: If the due date for payment falls on a national holiday or on a Sunday, then payment needs to be processed the following day. The following examples will make it easier to understand.
- A bill that is drawn on 23rd December with a due date of 23rd January, adding the grace period (3 days), the maturity date comes to 26th January. However, as 26th January is a national holiday, 25th January becomes the due date for payment.
- A bill is drawn on 1st June with a maturity period of a month; the due date arrived is 1st July. On adding 3 days of grace, the payment due date is 4th July. However, if 4th July is a Sunday, in this case, payment needs to be completed on 3rd July.
- Unexpected holidays: If the due date for payment falls on a holiday due to an emergency, then the next day becomes the day on which payment needs to be done. For example, if a bill is drawn on 1st May with a term of 20 days, then, adding a grace period of 3 days, the payment due date becomes 24th May. But, if a nationwide strike gets declared on 24th May, then 25th May is the new due date for the payment of the bill as per rules.
4. Distinguish between bill of exchange and promissory note.
The points of comparison are as follows:
Basis of Comparison | Bills of Exchange | Promissory Note |
What it contains | It contains an order to pay | It contains a promise to pay |
Parties | It involves three parties which are: drawer, payee and acceptor | It involves two parties and they are: maker/drawer and payee |
Drawn by | Creditor | Debtor |
Acceptance | Acceptance required by the debtor | Being drawn by promissor, it requires no acceptance |
Payee | The same person can be payee and drawer | Promissor and Payee cannot be same |
Noting in case of dishonour | Dishonouring of the instrument, leads to noting of the bill | No requirement of noting |
Liability | Liability does not rest with the drawer primarily | Promissor is primarily responsible |
- Briefly explain the purpose and benefits of retiring a bill of exchange to the debtor and the creditor.
Retirement of a bill of exchange happens when the holder of the bill of exchange receives a payment from the acceptor before the accepted maturity date of the bill. In such cases, the bill holder provides some discount to the acceptor and such a discount offered is called a “rebate”.
The following are the benefits of retiring a bill of exchange for debtor and creditor:
- Improves the trust between two parties in a transaction, namely, debtor and creditor.
- Allows creditors to use the money for further business
- Rebate provided by creditor becomes the revenue for a debtor
- More business transactions can be conducted between two parties.
- Explain briefly the purpose and advantages of maintaining of a Bills Receivable Book.
In day-to-day operations, a business receives many bills. Maintaining a journal for all such bills is a cumbersome task. In this case, a specialized book is created which keeps a record of all such bills that are received from the debtors. This book contains all the necessary information, such as bill date, due date, amount, and debtor’s name, and it is summed up on a periodical basis and the balance thus obtained is transferred to the debit side of the bills receivable account.
Maintaining a bills receivable book has the following benefits:
- All information pertaining to the bills receivable, such as due date, amount, etc., get recorded in one place, thereby making it easy to access the records.
- Likelihood of fraud is greatly minimized as bills are recorded in one place.
- Higher level of liability and obligation exists on the person maintaining the accounts. If any error is spotted, it can be rectified easily.
- Time of the accountant is saved as the recording of transactions is recurring and similar in nature.
- As it is a particular book only dealing with bills receivable, it is easy to locate all details pertaining to a specific bill of exchange.
6. Briefly explain the benefits of maintaining a Bills Payable Book and state how is its posting is done in the ledger?
Maintaining the bills payable book has the following benefits:
- Quick, efficient and accurate recording of business transactions.
- Minimizes the chances of fraud as all the bills are recorded in one place
- A high degree of accountability and answerability on the part of the accountant is observed as all the transactions get verified by the same person, which leads to easy detection and rectification of errors.
- As information is documented by an individual, it improves the division of labour and efficiency of the organization.
The procedure of posting to ledger:
The recordings from the Bills Payable Book are posted to the accounts of the creditors who received acceptance from the debtors. These books are then totalled periodically and credited to the Bills Payable Account in the ledger.
These were some important long answer type of questions from Chapter 8 Bill of Exchange.
These are some important long answer type questions from Chapter 8 Bill of Exchange.
Numerical Answers for Bill of Exchange Class 11 Chapter 8
- On Jan 01, 2016 Rao sold goods ₹ 10,000 to Reddy. Half of the payment was made immediately and for the remaining half Rao drew a bill of exchange upon Reddy payable after 30 days. Reddy accepted the bill and returned it to Rao. On the due date Rao presented the bill to Reddy and received the payment. Journalise the above transactions in the books Rao and prepare of Rao’s account in the books of Reddy.
The transactions are journalized below:
Books of Rao | ||||||
Journal | ||||||
Date | Particulars | L.F. | Debit
Amount ₹ |
Credit
Amount ₹ |
||
2016 | ||||||
01 Jan | Reddy | Dr. | 10,000 | |||
To Sales A/c | 10,000 | |||||
(Goods traded to Reddy) | ||||||
01 Jan | Cash A/c | Dr. | 5,000 | |||
To Reddy | 5,000 | |||||
(Cash received from Reddy) | ||||||
01 Jan | Bills Receivable A/c | Dr. | 5,000 | |||
To Reddy | 5,000 | |||||
(Bill received for 30 days accepted by Reddy) | ||||||
03 Feb | Cash A/c | Dr. | 5,000 | |||
To Bills Receivable A/c | 5,000 | |||||
(Reddy’s acceptance met on due date) | ||||||
Books of Reddy | |||||||
Rao’s Account | |||||||
Dr. | Cr. | ||||||
Date | Particulars | J.F. | Amount
₹ |
Date | Particulars | J.F. | Amount
₹ |
01 Jan | Cash | 5,000 | 2016 | ||||
01 Jan | Bills Receivable | 5,000 | 01 Jan | Purchases | 10,000 | ||
10,000 | 10,000 | ||||||
- On Jan 01, 2016, Shankar purchased goods from Parvati for ₹ 8,000 and immediately drew a promissory note in favour of Parvati payable after 3 months. On the date of maturity of the promissory note, the Government of India declared holiday under the Negotiable Instrument Act 1881. Since, Parvati was unaware about the provision of the law regarding the date of maturity of the bill, she handed over the bill to her lawyer, who duly presented the bill and received the payment. The amount of the bill was handed over by the lawyer to Parvati immediately. Record the necessary Journal entries in the books of Parvati and Shankar.
The necessary journal entries are as follows:
Books of Parvati | |||||||
Journal | |||||||
Date | Particulars | L.F. | Debit
Amount ₹ |
Credit
Amount ₹ |
|||
2016 | |||||||
01 Jan | Shankar | Dr. | 8,000 | ||||
To Sales A/c | 8,000 | ||||||
(Sold goods to Shankar) | |||||||
01 Jan | Bills Receivable A/c | Dr. | 8,000 | ||||
To Shankar | 8,000 | ||||||
(Shankar sent Promissory Note for
three months) |
|||||||
05 Apr | Cash A/c | Dr. | 8,000 | ||||
To Bills Receivable A/c | 8,000 | ||||||
(Cash received for Promissory Note one day after the
Maturity date on account of holiday declared by Govt.) |
|||||||
Books of Shankar | |||||||
Journal | |||||||
Date | Particulars | L.F. | Debit
Amount ₹ |
Credit
Amount ₹ |
|||
2016 | |||||||
01 Jan | Purchases A/c | Dr. | 8,000 | ||||
To Parvati | 8,000 | ||||||
(Goods purchased from Parvati) | |||||||
01 Jan | Parvati | Dr. | 8,000 | ||||
To Bills Payable A/c | 8,000 | ||||||
(Promissory note for three months sent to Parvati) | |||||||
05 Apr | Bills Payable A/c | Dr. | 8,000 | ||||
To Cash A/c | 8,000 | ||||||
(Cash paid on maturity of promissory note) | |||||||
- Vishal sold goods for ₹ 7,000 to Manju on Jan 05, 2016 and drew upon her a bill of exchange payable after 2 months. Manju accepted Vishal’s draft and handed over the same to Vishal after acceptance. Vishal immediately discounted the bill with his bank@12% p.a. On the due date Manju met her acceptance. Journalise the above transactions in the books of Vishal and Manju.
The transactions are journalized as follows:
Books of Vishal | |||||||
Journal | |||||||
Date | Particulars | L.F. | Debit
Amount ₹ |
Credit
Amount ₹ |
|||
2016 | |||||||
05 Jan | Manju | Dr. | 7,000 | ||||
To Sales A/c | 7,000 | ||||||
(Good Manju) | |||||||
05 Jan | Bills Receivable A/c | Dr. | 7,000 | ||||
To Manju | 7,000 | ||||||
(Manju’s acceptance received for two months) | |||||||
05 Jan | Bank A/c | Dr. | 6,860 | ||||
Discount A/c | Dr. | 140 | 7,000 | ||||
To Bills Receivable A/c | |||||||
(Bill Receivable discounted with the bank @ 12 % p.a. for two months) | |||||||
Books of Manju | |||||||
Journal | |||||||
Date | Particulars | L.F. | Debit
Amount ₹ |
Credit
Amount ₹ |
|||
2016 | |||||||
05 Jan | Purchases A/c | Dr. | 7,000 | ||||
To Vishal | 7,000 | ||||||
(purchasing from Vishal) | |||||||
05 Jan | Vishal | Dr. | 7,000 | ||||
To Bills Payable A/c | 7,000 | ||||||
(Bill drawn by Vishal acknowledged) | |||||||
08 Mar | Bills Payable A/c | Dr. | 7,000 | ||||
To Bank A/c | 7,000 | ||||||
(Bill Payable Amount paid to bank on maturity) | |||||||
- On 01 Feb, 2016, John purchased goods for ₹ 15,000 from Jimmi. He immediately made a payment of ₹ 5,000 by cheque and for the balance accepted the bill of exchange drawn upon him by Jimmi. The bill of exchange was payable after 40 days. Five days before the maturity of the bill, Jimmi 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 Jimmi. Prepare John’s account in the books of Jimmi and Jimmi account in the books of John.
The entries are shown below:
Books of Jimmi | |||||||
Journal | |||||||
Date | Particulars | L.F. | Debit
Amount ₹ |
Credit
Amount ₹ |
|||
2016 | |||||||
01 Feb | John | Dr. | 15,000 | ||||
To Sales A/c | 15,000 | ||||||
(Goods traded to John) | |||||||
01 Feb | Bank A/c | Dr. | 5,000 | ||||
To John | 5,000 | ||||||
(Cheque acknowledged for ₹ 5,000 from John) | |||||||
01 Feb | Bills Receivable A/c | Dr. | 10,000 | ||||
To John | 10,000 | ||||||
(Bill received from John for 40 days) | |||||||
10 Mar | Bill Sent for Collection A/c | Dr. | 10,000 | ||||
To Bills Receivable A/c | 10,000 | ||||||
(John’s approval sent to bank for collection) | |||||||
15 Mar | Bank A/c | Dr. | 10,000 | ||||
To Bill Sent for Collection A/c | 10,000 | ||||||
(John’s approval met on due date and bank
got the payment) |
|||||||
Ledger
John’s Account |
|||||||
Dr. | Cr. | ||||||
Date | Particulars | J.F. | Amount ₹ | Date | Particulars | J.F. | Amount ₹ |
2016 | 2016 | ||||||
01 Feb | Sales | 15,000 | 01 Feb | Bank | 5,000 | ||
01 Feb | Bills Receivable | 10,000 | |||||
15,000 | 15,000 | ||||||
Books of John | ||||||||
Journal | ||||||||
Date | Particulars | L.F. | Debit
Amount ₹ |
Credit
Amount ₹ |
||||
2016 | ||||||||
01 Feb | Purchases A/c | Dr. | 15,000 | |||||
To Jimmi | 15,000 | |||||||
(Goods purchased from Jimmi) | ||||||||
01 Feb | Jimmi | Dr. | 5,000 | |||||
To Bank A/c | 5,000 | |||||||
(Cheque payment done to Jimmi) | ||||||||
01 Feb | Jimmi | Dr. | 10,000 | |||||
To Bills Payable A/c | 10,000 | |||||||
(Bill drawn by Jimmi acknowledged for 40 days) | ||||||||
15 Mar | Bills Payable A/c | Dr. | 10,000 | |||||
To Bank A/c | 10,000 | |||||||
(Payment of bill done on maturity to bank) | ||||||||
Ledger
Jimmi’s Account |
|||||||
Dr. | Cr. | ||||||
Date | Particulars | J.F. | Amount ₹ | Date | Particulars | J.F. | Amount ₹ |
2016 | 2016 | ||||||
01 Feb | Bank | 5,000 | 01 Feb | Purchases | 15,000 | ||
01 Feb | Bills Payable | 10,000 | |||||
15,000 | 15,000 | ||||||
- On Jan 15, 2015, Kartar Sold goods for ₹ 30,000 to Bhagwan and drew upon him three bills of exchanges of ₹ 10,000 each payable after one month, two month, and three months respectively. The first bill was retained by Kartar till its maturity. The second bill was endorsed by him in favour of his creditor Ratna and the third bill was discounted by him immediately @ 6% p.a. All the bills were met by Bhagwan. Journalise the above transactions in the books of Kartar and Bhagwan. Also prepare ledger accounts in books of Kartar and Bhagwan.
The solution is as follows:
Journal Entries in the Books of Kartar | ||||||||
Date | Particulars | L.F. | Debit
Amount ₹ |
Credit
Amount ₹ |
||||
2015 | ||||||||
15 Jan | Bhagwan | Dr. | 30,000 | |||||
To Sales A/c | 30,000 | |||||||
( Goods traded to Bhagwan) | ||||||||
15 Jan | Bills Receivable A/c | Dr. | 10,000 | |||||
To Bhagwan A/C | 10,000 | |||||||
(Three bills of ₹ 10,000 each, received from
Bhagwan) |
||||||||
15 Jan | Ratna | Dr. | 10,000 | |||||
To Bills Receivable A/c | 10,000 | |||||||
(₹ 10,000 bill from Bhagwan endorsed to Ratna) | ||||||||
15 Jan | Bank A/c | Dr. | 9,850 | |||||
Discount A/c | Dr. | 150 | ||||||
To Bills Receivable A/c | 10,000 | |||||||
(B/R discounted) | ||||||||
19 Feb | Cash A/c | Dr. | 10,000 | |||||
To Bills Receivable A/c | 10,000 | |||||||
(First bill for one month paid by Bhagwan, on due date) | ||||||||
Bhagwan’s Account | |||||||||
Dr. | Cr. | ||||||||
Date | Particulars | J.F. | Amount
(₹) |
Date | Particulars | J.F. | Amount
(₹) |
||
2015 | 2015 | ||||||||
15 Jan | Sales A/c | 30,000 | 15 Jan | Bills Receivable A/c | 30,000 | ||||
30,000 | 30,000 | ||||||||
Ratna’s Account | |||||||||
Dr. | Cr. | ||||||||
Date | Particulars | J.F. | Amount
(₹) |
Date | Particulars | J.F. | Amount
(₹) |
||
2015 | 2015 | ||||||||
15 Jan | Bills Receivable A/c | 10,000 | 15 Jan | Balance b/d | 10,000 | ||||
10,000 | 10,000 | ||||||||
Bills Receivable Account | |||||||||
Dr. | Cr. | ||||||||
Date | Particulars | J.F. | Amount
(₹) |
Date | Particulars | J.F. | Amount
(₹) |
||
2015 | 2015 | ||||||||
15 Jan | Bhagwan | 30,000 | 15 Jan | Ratna | 10,000 | ||||
15 Jan | Bank A/c | 9,850 | |||||||
15 Jan | Discount A/c | 150 | |||||||
19 Feb | Cash | 10,000 | |||||||
30,000 | 30,000 | ||||||||
Cash Account | ||||||||||
Dr. | Cr. | |||||||||
Date | Particulars | J.F. | Amount
(₹) |
Date | Particulars | J.F. | Amount
(₹) |
|||
2015 | 2015 | |||||||||
19 Feb | Bills Receivable | 10,000 | 19 Feb | Balance c/d | 10,000 | |||||
10,000 | 10,000 | |||||||||
Bank’s Account | |||||||||
Dr. | Cr. | ||||||||
Date | Particulars | J.F. | Amount
(₹) |
Date | Particulars | J.F. | Amount
(₹) |
||
2015 | 2015 | ||||||||
15 Jan | Bills Receivable | 9,850 | 15 Jan | Balance c/d | 9,850 | ||||
9,850 | 9,850 | ||||||||
Journal Entries in the Books of Bhagwan | |||||||
Date | Particulars | L.F. | Debit
Amount ₹ |
Credit
Amount ₹ |
|||
2015 | |||||||
15 Jan | Purchases A/c | Dr. | 30,000 | ||||
To Kartar | 30,000 | ||||||
(Good bought from Kartar on credit) | |||||||
15 Jan | Kartar | Dr. | 30,000 | ||||
To Bills Payable A/c | 30,000 | ||||||
(Three bills of ₹ 10,000 each drawn by Kartar–
Accepted and returned them to Kartar) |
|||||||
19 Feb | Bills Payable A/c | Dr. | 10,000 | ||||
To Cash A/c | 10,000 | ||||||
(First bill payment completed on due date) | |||||||
19 Mar | Bills Payable A/c | Dr. | 10,000 | ||||
To Bank A/c | 10,000 | ||||||
(Second bill payment completed on due date to Ratna) | |||||||
19 Apr | Bills Payable A/c | Dr. | 10,000 | ||||
To Bank A/c | 10,000 | ||||||
(Third bill payment completed on due date to bank) | |||||||
Kartar’s Account | |||||||||
Dr. | Cr. | ||||||||
Date | Particulars | J.F. | Amount
(₹) |
Date | Particulars | J.F. | Amount
(₹) |
||
2015 | 2015 | ||||||||
15 Jan | Bills Payable A/c | 30,000 | 15 Jan | Purchases | 30,000 | ||||
30,000 | 30,000 | ||||||||
Bills Payable Account | |||||||||
Dr. | Cr. | ||||||||
Date | Particulars | J.F. | Amount
(₹) |
Date | Particulars | J.F. | Amount
(₹) |
||
2015 | 2015 | ||||||||
19 Feb | Cash A/c | 10,000 | 15 Jan | Kartar | 30,000 | ||||
19 Mar | Bank A/c | 10,000 | |||||||
19 Apr | Bank A/c | 10,000 | |||||||
30,000 | 30,000 | ||||||||
Cash Account | |||||||||
Dr. | Cr. | ||||||||
Date | Particulars | J.F. | Amount
(₹) |
Date | Particulars | J.F. | Amount
(₹) |
||
2015 | 2015 | ||||||||
19 Feb | Balance b/d | 10,000 | 19 Feb | Bills Payable A/c | 10,000 | ||||
10,000 | 10,000 | ||||||||
Bank’s Account | |||||||||
Dr. | Cr. | ||||||||
Date | Particulars | J.F. | Amount
(₹) |
Date | Particulars | J.F. | Amount
(₹) |
||
2015 | 2015 | ||||||||
15 Mar | Balance b/d | 20,000 | 19 Mar | Bills Payable A/c | 10,000 | ||||
19 Apr | Bills Payable A/c | 10,000 | |||||||
20,000 | 20,000 | ||||||||
- On Jan. 01, 2016 Arun sold goods for ₹ 30,000 to Sunil. 50% of the payment was made immediately by Sunil on which Arun allowed a cash discount of 2%. For the balance Sunil drew a promissory note in favour of Arun payable after 20 days. Since, the date of maturity of bill was a public holiday, Arun presented the bill on a day, as per the provisions of Negotiable Instrument Act which was met by Sunil. State the date on which the bill was presented by Arun for payment and journalise the above transactions in the books of Arun and Sunil.
The transactions are journalized as follows:
Journal Entries in the Books of Arun | ||||||||
Date | Particulars | L.F. | Debit
Amount ₹ |
Credit
Amount ₹ |
||||
2016 | ||||||||
01 Jan | Sunil | Dr. | 30,000 | |||||
To Sales A/c | 30,000 | |||||||
(Goods traded to Sunil) | ||||||||
01 Jan | Cash A/c | Dr. | 14,700 | |||||
Discount Allowed A/c | Dr. | 300 | ||||||
To Sunil | 15,000 | |||||||
(50% due from Sunil received and
2% Cash Discount allowed to Sunil) |
||||||||
01 Jan | Bills Receivable A/c | Dr. | 15,000 | |||||
To Sunil | 15,000 | |||||||
(Promissory note established for 20 days from Sunil) | ||||||||
23 Jan | Cash A/c | Dr. | 15,000 | |||||
To Bills Receivable A/c | 15,000 | |||||||
(Cash received from Sunil before
Maturity) |
||||||||
Journal Entries in the Book of Sunil | |||||||
Date | Particulars | L.F. | Debit ₹ | Credit₹ | |||
2016 | |||||||
01 Jan | Purchases A/c | Dr. | 30,000 | ||||
To Arun | 30,000 | ||||||
(Goods purchased from Arun) | |||||||
01 Jan | Arun | Dr. | 15,000 | ||||
To Cash A/c | 14,700 | ||||||
To Discount Received A/c | 300 | ||||||
(50% amount due to Arun paid by cheque and 2% discount allowed by Arun) | |||||||
01 Jan | Arun | Dr. | 15,000 | ||||
To Bills Payable A/c | 15,000 | ||||||
(Promissory note issued in favour of Arun for twenty days) | |||||||
23 Jan | Bills Payable A/c | Dr. | 15,000 | ||||
To Cash A/c | 15,000 | ||||||
(Promissory note fulfilled one day before the maturity day) | |||||||
- Darshan sold goods for ₹ 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.
The entries are shown below:
(i)
Books of Darshan | |||||||
Date | Particulars | L.F. | Debit
Amount ₹ |
Credit
Amount ₹ |
|||
2016 | |||||||
08 Jan | Varun | Dr. | 40,000 | ||||
To Sales A/c | 40,000 | ||||||
(Goods traded to Varun) | |||||||
08 Jan | Bills Receivable A/c | Dr. | 40,000 | ||||
To Varun | 40,000 | ||||||
(Bill of Exchange duly accepted and returned by Varun) | |||||||
11 Mar | Cash A/c | Dr. | 40,000 | ||||
To Bills Receivable A/c | 40,000 | ||||||
(Payment for B/R received for B/R) | |||||||
Books of Varun | ||||||||
Date | Particulars | L.F | Debit ₹ | Credit₹ | ||||
2016 | ||||||||
08 Jan | Purchases A/c | Dr. | 40,000 | |||||
To Darshan | 40,000 | |||||||
(Goods purchased from Darshan) | ||||||||
08 Jan | Darshan | Dr. | 40,000 | |||||
To Bills Payable A/c | 40,000 | |||||||
(Bill of two months accepted for Darshan) | ||||||||
11 Mar | Bills Payable A/c | Dr. | 40,000 | |||||
To Cash A/c | 40,000 | |||||||
(Varun cleared his payment on the due date) | ||||||||
(ii)
Books of Darshan | ||||||||||||
Date | Particulars | L.F. | Debit
Amount ₹ |
Credit
Amount ₹ |
||||||||
2016 | ||||||||||||
08 Jan | Varun | Dr. | 40,000 | |||||||||
To Sales A/c | 40,000 | |||||||||||
(Goods traded to Varun) | ||||||||||||
08 Jan | Bills Receivable A/c | Dr. | 40,000 | |||||||||
To Varun | 40,000 | |||||||||||
(B/R received from Varun for two months) | ||||||||||||
08 Jan | Bank A/c | Dr. | 39,600 | |||||||||
Discount A/c | Dr. | 400 | ||||||||||
To Bills Receivable A/c | 40,000 | |||||||||||
(B/R discounted from bank @ 6 p.a.) | ||||||||||||
Books of Varun | ||||||||
Date | Particulars | L.F. | Debit ₹ | Credit₹ | ||||
2016 | ||||||||
08 Jan | Purchases A/c | Dr. | 40,000 | |||||
To Darshan | 40,000 | |||||||
(Goods purchased from Darshan) | ||||||||
08 Jan | Darshan | Dr. | 40,000 | |||||
To Bills Payable A/c | 40,000 | |||||||
(Bill of two months accepted for Darshan) | ||||||||
11 Mar | Bills Payable A/c | Dr. | 40,000 | |||||
To Bank A/c | 40,000 | |||||||
(Varun cleared his payment on the
due date) |
||||||||
(iii)
Books of Darshan | ||||||||
Date | Particulars | L.F. | Debit
Amount ₹ |
Credit
Amount ₹ |
||||
2016 | ||||||||
08 Jan | Varun | Dr. | 40,000 | |||||
To Sales A/c | 40,000 | |||||||
(Goods traded to Varun) | ||||||||
08 Jan | Bills Receivable A/c | Dr. | 40,000 | |||||
To Varun A/c | 40,000 | |||||||
(Varun’s approval received for two months) | ||||||||
08 Jan | Suresh A/c | Dr. | 40,000 | |||||
To Bills Receivable A/c | 40,000 | |||||||
(Varun’s approval endorsed in favour of Suresh) | ||||||||
Books of Varun | ||||||||
Date | Particulars | L.F | Debit ₹ | Credit₹ | ||||
2016 | ||||||||
08 Jan | Purchases A/c | Dr. | 40,000 | |||||
To Darshan | 40,000 | |||||||
(Goods purchased from Darshan) | ||||||||
08 Jan | Darshan | Dr. | 40,000 | |||||
To Bills Payable A/c | 40,000 | |||||||
(Bill drawn by Darshan accepted for two months) | ||||||||
11 Mar | Bills Payable A/c | Dr. | 40,000 | |||||
To Cash A/c | 40,000 | |||||||
(Bill paid to the holder of bill) | ||||||||
(iv)
Books of Darshan | |||||||
Date | Particulars | L.F. | Debit
Amount ₹ |
Credit
Amount ₹ |
|||
2016 | |||||||
08 Jan | Varun A/c | Dr. | 40,000 | ||||
To Sales A/c | 40,000 | ||||||
(Goods traded to Varun) | |||||||
08 Jan | Bills Receivable A/c | Dr. | 40,000 | ||||
To Varun A/c | 40,000 | ||||||
(Bill of Exchange duly accepted and returned by Varun) | |||||||
08 Mar | Bill Sent for Collection A/c | Dr. | 40,000 | ||||
To Bills Receivable A/c | 40,000 | ||||||
(Bill of Exchange sent for collection to bank) | |||||||
11 Mar | Bank A/c | Dr. | 40,000 | ||||
To Bill Sent for Collection A/c | 40,000 | ||||||
(Bill of Exchange matured and duly collected on date of maturity) | |||||||
Books of Varun | ||||||||
Date | Particulars | L.F. | Debit
Amount ₹ |
Credit
Amount ₹ |
||||
2016 | ||||||||
08 Jan | Purchases A/c | Dr. | 40,000 | |||||
To Darshan | 40,000 | |||||||
(Goods purchased from Darshan) | ||||||||
08 Jan | Darshan | Dr. | 40,000 | |||||
To Bills Payable A/c | 40,000 | |||||||
(Bill of Exchange duly accepted and returned to Darshan) | ||||||||
11 Mar | Bills Payable A/c | Dr. | 40,000 | |||||
To Bank A/c | 40,000 | |||||||
(Bill of Exchange matured and duly cleared on date of maturity) | ||||||||
- Bansal Traders allow a trade discount of 10% on the list price of the goods purchased from them. Mohan traders, who runs a retail shop made the following purchases from Bansal Traders.
Date Amount
₹
21 Dec, 2016 1,000
26 Dec, 2016 1,200
Dec.18, 2016 2,000
31 Dec, 2016 5,000
For all the purchases Mohan Traders drew promissory note in favour of Bansal Traders payable after 30 days. The promissory note for the sale of Dec. 21, 2016 was retained by Bansal Traders with them till the date of its maturity. The promissory note drawn on 26.12.2016 was discounted by Bansal Traders from their bank at 12% p.a. The promissory note drawn on Dec. 28, 2016 was endorsed by Bansal Traders in favour of their creditor Dream Soaps in full settlement of a purchase amounting to ₹ 1,900. On 25.1.2017 Bansal Traders sent the promissory note drawn on Dec. 31, 2016 to their bank for collection. All the promissory notes were met by Mohan Traders. Record the necessary journal entries for the above transactions in the books of Bansal Traders and Mohan Traders and prepare Mohan Traders account in the books of Bansal Traders and Bansal Traders account in the books of Mohan Traders.
The necessary journal entries are as follows:
Journal Entries in the Books of Bansal Traders | |||||||
Date | Particulars | L.F. | Debit ₹ | Credit₹ | |||
2016 | |||||||
21 Dec | Mohan Traders | Dr. | 900 | ||||
To Sales A/c | 900 | ||||||
(Goods traded to Mohan Traders list price ₹
1,000 at 10% trade discount) |
|||||||
2016 | |||||||
21 Dec | Bills Receivable A/c | Dr. | 900 | ||||
To Mohan Traders | 900 | ||||||
(Promissory note established from Mohan Traders
payable after 30 days) |
|||||||
2016 | |||||||
26 Dec | Mohan Traders | Dr. | 1,080 | ||||
To Sales A/c | 1,080 | ||||||
(Goods traded to Mohan Traders list price ₹
1,200 at 10% trade discount) |
|||||||
2016 | |||||||
26 Dec | Bills Receivable A/c | Dr. | 1,080 | ||||
To Mohan Traders | 1,080 | ||||||
(Promissory note received from Mohan Traders) | |||||||
2016 | |||||||
26 Dec | Bank A/c | Dr. | 1,071 | ||||
Discount A/c | Dr. | 9 | |||||
To Bills Receivable A/c | 1,080 | ||||||
(Promissory note discounted from the Bank) | |||||||
2016 | |||||||
28 Dec | Mohan Traders A/c | Dr. | 1,800 | ||||
To Sales A/c | 1,800 | ||||||
(Goods traded to Mohan Traders list price ₹
2,000 at 10% trade discount) |
|||||||
2016 | |||||||
28 Dec | Bills Receivable A/c | Dr. | 1,800 | ||||
To Mohan Traders A/c | 1,800 | ||||||
(Promissory note established from Mohan Traders) | |||||||
2016 | |||||||
28 Dec | Dream Soaps A/c | Dr. | 1,900 | ||||
To Bills Receivable A/c | 1,800 | ||||||
To Discount Received A/c | 100 | ||||||
(Promissory note of ₹ 1,800 sent to Dream
Soap in full settlement of amount due to him) |
|||||||
2016 | |||||||
31 Dec | Mohan Traders | Dr. | 4,500 | ||||
To Sales A/c | 4,500 | ||||||
(Goods traded to Mohan trades list price ₹
5,000 at 10% trade discount) |
|||||||
2016 | |||||||
31 Dec | Bills Receivable A/c | Dr. | 4,500 | ||||
To Mohan Traders | 4,500 | ||||||
(Promissory note established from Mohan Traders for 30 days) | |||||||
2017 | |||||||
23 Jan | Cash A/c | Dr. | 900 | ||||
To Bills Receivable A/c | 900 | ||||||
(Promissory note issued on Dec. 21,
2005 was met on maturity) |
|||||||
2017 | |||||||
25 Jan | Bill Sent for collection A/c | Dr. | 4,500 | ||||
To Bills Receivable A/c | 4,500 | ||||||
(Promissory note issued on Dec. 31, 2005
sent for collection to bank) |
|||||||
2017 | |||||||
02 Feb | Bank A/c | Dr. | 4,500 | ||||
To Bill Sent for Collection A/c | 4,500 | ||||||
(Bank got payment of bill sent for collection
on due date) |
|||||||
In the books of Bansal Traders
Mohan Trader’s Account |
||||||||
Dr. | Cr. | |||||||
Date | Particulars | J.F. | Amount
₹ |
Date | Particulars | J.F. | Amount
₹ |
|
2016 | 2016 | |||||||
21 Dec | Sales | 900 | 21 Dec | Bills Receivable | 900 | |||
26 Dec | Sales | 1,080 | 26 Dec | Bills Receivable | 1,080 | |||
28 Dec | Sales | 1,800 | 28 Dec | Bills Receivable | 1,800 | |||
31 Dec | Sales | 4,500 | 31 Dec | Bills Receivable | 4,500 | |||
8,280 | 8,280 | |||||||
Journal Entries in the Books of Mohan Trader’s | |||||||||||
Date | Particulars | L.F. | Debit ₹ | Credit₹ | |||||||
2016 | |||||||||||
21 Dec | Purchases A/c | Dr. | 900 | ||||||||
To Bansal Traders | 900 | ||||||||||
(Goods purchased from Bansal Trader’s list price ₹
1,000 at 10% trade discount) |
|||||||||||
2016 | |||||||||||
21 Dec | Bansal Trader | Dr. | 900 | ||||||||
To Bills Payable A/c | 900 | ||||||||||
(Promissory note issued Bansal Traders for ₹ 900) | |||||||||||
2016 | |||||||||||
26 Dec | Purchases A/c | Dr. | 1,080 | ||||||||
To Bansal Traders | 1,080 | ||||||||||
(Goods purchased from Bansal Traders list price ₹
1,200 at 10% Trade discount) |
|||||||||||
2016 | |||||||||||
26 Dec | Bansal Traders | Dr. | 1,080 | ||||||||
To Bills Payable A/c | 1,080 | ||||||||||
(Promissory note established from Bansal Traders) | |||||||||||
2016 | |||||||||||
28 Dec | Purchases A/c | Dr. | 1,800 | ||||||||
To Bansal Traders | 1,800 | ||||||||||
(Goods purchased from Bansal Traders list price ₹
2,000 at 10% trade discount) |
|||||||||||
2016 | |||||||||||
28 Dec | Bansal Traders | Dr. | 1,800 | ||||||||
To Bills Payable A/c | 1,800 | ||||||||||
(Promissory note issued to Bansal Traders) | |||||||||||
2016 | |||||||||||
31 Dec | Purchases A/c | Dr. | 4,500 | ||||||||
To Bansal Traders | 4,500 | ||||||||||
(Goods purchased from Bansal Traders of list price ₹
5,000 at 10% trade discount) |
|||||||||||
2016 | |||||||||||
31 Dec | Bansal Traders | Dr. | 4,500 | ||||||||
To Bills Payable A/c | 4,500 | ||||||||||
(Promissory note issued to Bansal Traders) | |||||||||||
2017 | |||||||||||
23 Jan | Bills Payable A/c | Dr. | 900 | ||||||||
To Cash A/c | 900 | ||||||||||
(The first promissory note discharged on its due date) | |||||||||||
2017 | |||||||||||
28 Jan | Bills Payable A/c | Dr. | 1,080 | ||||||||
To Bank A/c | 1,080 | ||||||||||
(The second promissory note discharged on its due
date) |
|||||||||||
2017 | |||||||||||
30 Jan | Bills Payable A/c | Dr. | 1,800 | ||||||||
To Cash A/c | 1,800 | ||||||||||
(The third promissory discharged by paying
₹1,800 to Dream Soaps) |
|||||||||||
2017 | |||||||||||
02 Feb | Bills Payable A/c | Dr. | 4,500 | ||||||||
To Bank A/c | 4,500 | ||||||||||
(The fourth promissory note discharged by paying ₹ 4,500 to Bank) | |||||||||||
In the books of Mohan Traders
Bansal Trader’s Account |
|||||||
Dr. | Cr. | ||||||
Date | Particulars | J.F. | Amount ₹ | Date | Particulars | J.F. | Amount ₹ |
2016 | 2016 | ||||||
21 Dec | Bills Payable | 900 | 21 Dec | Purchases | 900 | ||
26 Dec | Bills Payable | 1,080 | 26 Dec | Purchases | 1,080 | ||
28 Dec | Bills Payable | 1,800 | 28 Dec | Purchases | 1,800 | ||
31 Dec | Bills Payable | 4,500 | 31 Dec | Purchases | 4,500 | ||
8,280 | 8,280 | ||||||
- Narayanan purchased goods for ₹ 25,000 from Ravindran on Feb. 01, 2016. Ravindran drew upon Narayanan a bill of exchange for the same amount payable after 30 days. On the due date Narayanan dishonoured his acceptance. Pass the necessary journal entries in the books of Ravindran and Narayanan in following cases:
- When the bill was retained by Ravindran with him till the date of its maturity.
- When the bill was discounted by Ravindran immediately with his bank @ 6% p.a.
- When the bill was endorsed to his creditor Ganeshan.
- When the bill was sent by Ravindran to his bank for collection a few days before it maturity.
Necessary journal entries are as follows:
(i) : When the bill was retained by Ravindran with him till the date of its maturity
Books of Ravindran | |||||||
Journal | |||||||
Date | Particulars | L.F. | Debit ₹ | Credit₹ | |||
2016 | |||||||
01 Feb | Narayanan | Dr. | 25,000 | ||||
To Sales A/c | 25,000 | ||||||
(Goods traded to Narayanan) | |||||||
01 Feb | Bills Receivable A/c | Dr. | 25,000 | ||||
To Narayanan | 25,000 | ||||||
(Narayanan’s acceptance received for 30 days) | |||||||
05 Mar | Narayanan | Dr. | 25,000 | ||||
To Bills Receivable A/c | 25,000 | ||||||
(Narayanan failed to meet his
acceptance and bill dishonoured) |
|||||||
Books of Narayanan | ||||||||
Journal | ||||||||
Date | Particulars | L.F. | Debit ₹ | Credit₹ | ||||
2016 | ||||||||
01 Feb | Purchases A/c | Dr. | 25,000 | |||||
To Ravindran | 25,000 | |||||||
(Goods purchased from Ravindran) | ||||||||
01 Feb | Ravindran | Dr. | 25,000 | |||||
To Bills Payable A/c | 25,000 | |||||||
(Ravindran’s bill accepted) | ||||||||
05 Mar | Bills Payable A/c | Dr. | 25,000 | |||||
To Ravindran A/c | 25,000 | |||||||
(Bill dishonoured on maturity) | ||||||||
(ii) : When the bill was discounted by Ravindran immediately with his bank @ 6% p.a.
Books of Ravindran | ||||||||
Journal | ||||||||
Date | Particulars | L.F. | Debit ₹ | Credit₹ | ||||
2016 | ||||||||
01 Feb | Narayanan | Dr. | 25,000 | |||||
To Sales A/c | 25,000 | |||||||
(Goods traded to Narayanan) | ||||||||
01 Feb | Bills Receivable A/c | Dr. | 25,000 | |||||
To Narayanan | 25,000 | |||||||
(Narayanan’s acceptance received) | ||||||||
01 Feb | Bank A/c | Dr. | 24,875 | |||||
Discount A/c | Dr. | 125 | ||||||
To Bills Receivable A/c | 25,000 | |||||||
(Narayanan’s acceptance got discounted with
bank @ 6% p.a.) |
||||||||
05 Mar | Narayanan | 25,000 | ||||||
To Bank A/c | 25,000 | |||||||
(Narayanan’s acceptance dishonoured) | ||||||||
Books of Narayanan | ||||||||
Journal | ||||||||
Date | Particulars | L.F. | Debit ₹ | Credit₹ | ||||
2016 | ||||||||
01 Feb | Purchases A/c | Dr. | 25,000 | |||||
To Ravindran | 25,000 | |||||||
(Goods purchased from Ravindran) | ||||||||
01 Feb | Ravindran | Dr. | 25,000 | |||||
To Bills Payable A/c | 25,000 | |||||||
(Ravindran’s bill accepted) | ||||||||
05 Mar | Bills Payable A/c | Dr. | 25,000 | |||||
To Ravindran | 25,000 | |||||||
(Bill dishonoured on maturity) | ||||||||
(iii) : When the bill was endorsed to his creditor Ganeshan
Books of Ravindran | ||||||||
Journal | ||||||||
Date | Particulars | L.F. | Debit ₹ | Credit₹ | ||||
2016 | ||||||||
01 Feb | Narayanan | Dr. | 25,000 | |||||
To Sales A/c | 25,000 | |||||||
(Goods traded to Narayanan) | ||||||||
01 Feb | Bills Receivable A/c | Dr. | 25,000 | |||||
To Narayanan | 25,000 | |||||||
(Narayanan’s acceptance received) | ||||||||
01 Feb | Ganeshan | Dr. | 25,000 | |||||
To Bills Receivable A/c | 25,000 | |||||||
(Narayanan’s acceptance endorsed in favour
of Ganeshan) |
||||||||
05 Mar | Narayanan | Dr. | ||||||
To Ganeshan A/c | 25,000 | |||||||
(Narayanan’s acceptance dishonoured) | ||||||||
Books of Narayanan | ||||||||
Journal | ||||||||
Date | Particulars | L.F. | Debit ₹ | Credit₹ | ||||
2016 | ||||||||
01 Feb | Purchases A/c | Dr. | 25,000 | |||||
To Ravindran | 25,000 | |||||||
(Goods purchased from Ravindran) | ||||||||
01 Feb | Ravindran | Dr. | 25,000 | |||||
To Bills Payable A/c | 25,000 | |||||||
(Ravindran’s bill accepted) | ||||||||
05 Mar | Bills Payable A/c | Dr. | 25,000 | |||||
To Ravindran | 25,000 | |||||||
(Ravindran’s bill was dishonoured on due date) | ||||||||
(iv): When the bill was sent by Ravindran to his bank for collection a few days before it maturity
Books of Ravindran | ||||||||||||||
Journal | ||||||||||||||
Date | Particulars | L.F. | Debit ₹ | Credit₹ | ||||||||||
2016 | ||||||||||||||
01 Feb | Narayanan | Dr. | 25,000 | |||||||||||
To Sales A/c | 25,000 | |||||||||||||
(Goods traded to Narayanan) | ||||||||||||||
01 Feb | Bills Receivable A/c | Dr. | 25,000 | |||||||||||
To Narayanan | 25,000 | |||||||||||||
(Narayanan’s acceptance received) | ||||||||||||||
01 Feb | Bill Sent for Collection A/c | Dr. | 25,000 | |||||||||||
To Bills Receivable A/c | 25,000 | |||||||||||||
(Bill sent to bank for collection) | ||||||||||||||
05 Mar | Narayanan | Dr. | 25,000 | |||||||||||
To Bill Sent for Collection A/c | 25,000 | |||||||||||||
(Bill got dishonoured) | ||||||||||||||
Books of Narayanan | ||||||||||||||
Journal | ||||||||||||||
Date | Particulars | L.F. | Debit ₹ | Credit₹ | ||||||||||
2016 | ||||||||||||||
01 Feb | Purchases A/c | Dr. | 25,000 | |||||||||||
To Ravindran | 25,000 | |||||||||||||
(Bought goods from Ravindran) | ||||||||||||||
01 Feb | Ravindran | Dr. | 25,000 | |||||||||||
To Bills Payable A/c | 25,000 | |||||||||||||
(Ravindran’s bill accepted) | ||||||||||||||
05 Mar | Bills Payable A/c | Dr. | 25,000 | |||||||||||
To Ravindran | 25,000 | |||||||||||||
(Ravindran’s bill dishonoured) | ||||||||||||||
- Ravi sold goods for ₹ 40,000 to Sudershan on Feb 13, 2016. He drew four bills of exchange upon Sudershan. The first bill was for ₹ 5,000 payable after one month. The second bill was for ₹ 10,000 payable after 40 days; the third bill was for ₹ 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 ₹ 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.
The necessary journal entries are shown below:
Books of Ravi | ||||||||||||||
Journal | ||||||||||||||
Date | Particulars | L.F. | Debit
₹ |
Credit₹ | ||||||||||
2016 | ||||||||||||||
13 Feb | Sudershan | Dr. | 40,000 | |||||||||||
To Sales A/c | 40,000 | |||||||||||||
(Goods traded to Sudershan) | ||||||||||||||
13 Feb | Bills Receivable A/c | Dr. | 40,000 | |||||||||||
To Sudershan | 40,000 | |||||||||||||
(Four bills from Sudershan received: the first for
₹5,000, the second bill for ₹ 10,000, the third bill for ₹ 12,000 and the fourth bill for ₹ 13) |
||||||||||||||
13 Feb | 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.) | ||||||||||||||
13 Feb | 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) |
||||||||||||||
03 Mar | Bill Sent for Collection A/c | Dr. | 13,000 | |||||||||||
To Bills Receivable A/c | 13,000 | |||||||||||||
(The fourth bill sent to bank for collection) | ||||||||||||||
07 Mar | Sudershan | Dr. | 13,000 | |||||||||||
To Bill Sent for Collection A/c | 13,000 | |||||||||||||
(The fourth bill dishonoured on due date) | ||||||||||||||
07 Mar | Sudershan | Dr. | 81 | |||||||||||
To Interest A/c | 81 | |||||||||||||
(Interest due on the fourth bill ₹ 13,000 for 19
days at 12% p.a,) |
||||||||||||||
10 Mar | Cash A/c | Dr. | 13,081 | |||||||||||
To Sudershan | 13,081 | |||||||||||||
(Cash received from Sudershan) | ||||||||||||||
16 Mar | Sudershan | Dr. | 5,000 | |||||||||||
To Bank A/c | 5,000 | |||||||||||||
(The first bill dishonoured) | ||||||||||||||
16 Mar | Sudershan | Dr. | 50 | |||||||||||
To Interest A/c | 50 | |||||||||||||
(Interest due on amount ₹ 5,000 at 12%
for one month) |
||||||||||||||
19 Mar | 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) |
||||||||||||||
28 Mar | 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) |
||||||||||||||
28 Mar | Sudershan | Dr. | 132 | |||||||||||
To Interest A/c | 132 | |||||||||||||
(Interest charged at 12% on the amount due on account
of dishonour of the second bill ₹ 10,000) |
||||||||||||||
01 Apr | 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 dishonouring the third bill ₹ 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
Sudershan’s Account |
|||||||
Dr. | Cr. | ||||||
Date | Particulars | J.F. | Amount ₹ | Date | Particulars | J.F. | Amount ₹ |
2016 | 2016 | ||||||
13 Feb | Sales | 40,000 | 13 Feb | Bills Receivable | 40,000 | ||
07 Mar | Bill sent for Collection | 13,000 | 10 Mar | Cash | 13,081 | ||
07 Mar | Interest | 81 | 19 Mar | Cash | 5,050 | ||
16 Mar | Bank | 5,000 | 01 Apr | Cash | 10,132 | ||
16 Mar | Interest | 50 | May19 | Cash | 12,360 | ||
28 Mar | Mustaq | 10,000 | |||||
28 Mar | Interest | 132 | |||||
16 May | Bills Receivable | 12,000 | |||||
16 May | Interest | 360 | |||||
80,623 | 80,623 | ||||||
Mustaq’s Account | |||||||
Dr. | Cr. | ||||||
Date | Particulars | J.F. | Amount
₹ |
Date | Particulars | J.F. | Amount
₹ |
2016 | 2016 | ||||||
13 Feb | B/R | 10,000 | 28 Mar | Sudershan | 10,000 | ||
13 Feb | Discount Received | 200 | 28 Mar | Discount Received | 200 | ||
10,200 | 10,200 | ||||||
Books of Sudershan | ||||||||||
Journal | ||||||||||
Date | Particulars | L.F. | Debit ₹ | Credit₹ | ||||||
2016 | ||||||||||
13 Feb | Purchases A/c | Dr. | 40,000 | |||||||
To Ravi | 40,000 | |||||||||
(Goods purchased from Ravi) | ||||||||||
13 Feb | Ravi | Dr. | 40,000 | |||||||
To Bills Payable A/c | 40,000 | |||||||||
(Four bills drawn by Ravi accepted: the first bill for
₹ 5,000 payable after one month, the second for ₹ 10,000 payable after 40 days, the third for ₹ 12,000 payable after 3 months and the fourth for ₹ 13,000 payable after 19 days) |
||||||||||
07 Mar | Bills Payable A/c | Dr. | 13,000 | |||||||
To Ravi | 13,000 | |||||||||
(The fourth bill dishonoured) | ||||||||||
07 Mar | Interest A/c | Dr. | 81 | |||||||
To Ravi | 81 | |||||||||
(Interest charged for the amount of fourth bill
at 12% p.a.) |
||||||||||
10 Mar | Ravi | Dr. | 13,081 | |||||||
To Cash A/c | 13,081 | |||||||||
(Cash paid to Ravi for amount due on account of
dishonour of the fourth bill along with interest at 12% p.a. for 19 days) |
||||||||||
16 Mar | Bills Payable A/c | Dr. | 5,000 | |||||||
To Ravi | 5,000 | |||||||||
(The first bill dishonoured) | ||||||||||
16 Mar | Interest A/c | Dr. | 50 | |||||||
To Ravi | 50 | |||||||||
(Interest charged at 12% p.a. on the first bill for one month) | ||||||||||
19 Mar | Ravi | Dr. | 5,050 | |||||||
To Cash A/c | 5,050 | |||||||||
(Cash paid to Ravi for amount due on account of
dishonour of the first bill along with interest at 12% p.a. for one month) |
||||||||||
28 Mar | Bills Payable A/c | Dr. | 10,000 | |||||||
To Ravi | 10,000 | |||||||||
(The second bill dishonoured) | ||||||||||
28 Mar | Interest A/c | Dr. | 132 | |||||||
To Ravi | 132 | |||||||||
(Interest charged at 12% p.a. for 40 days on the second bill) | ||||||||||
01 Apr | Ravi | Dr. | 10,132 | |||||||
To Cash A/c | 10,132 | |||||||||
(Cash paid to Ravi for amount due on account of
dishonour of the second bill along with interest at 12% p.a. for 40 days) |
||||||||||
16 May | Bills Payable A/c | Dr. | 12,000 | |||||||
To Ravi | 12,000 | |||||||||
(The third bill dishonoured) | ||||||||||
16 Mar | Interest A/c | Dr. | 360 | |||||||
To Ravi | 360 | |||||||||
(Interest charged at 12% p.a. for 3 months on third bill) | ||||||||||
19 May | Ravi | Dr. | 12,360 | |||||||
To Cash A/c | 12,360 | |||||||||
(Cash paid to Ravi for amount due on account of
dishonour of the third bill along with interest at 12% p.a. for 3 months) |
||||||||||
- On Jan 01, 2016 Neha sold goods for ₹ 20,000 to Muskan and drew upon her a bill of exchange payable after two months. One month before the maturity of the bill Muskan approached Neha to accept the payment against the bill at a rebate @ 12% p.a. Neha agreed to the request of Muskan and Muskan retired the bill under the agreed rate of rebate. Journalise the above transaction in the books of Neha and Muskan.
The necessary journal entries are shown below:
Books of Neha
Journal |
||||||
Date | Particulars | L.F. | Debit ₹ | Credit₹ | ||
2016 | ||||||
01 Jan | Muskan | Dr. | 20,000 | |||
To Sales A/c | 20,000 | |||||
(Goods traded to Muskan) | ||||||
01 Jan | Bills Receivable A/c | Dr. | 20,000 | |||
To Muskan | 20,000 | |||||
(Muskan’s acceptance received) | ||||||
04 Feb | Cash A/c | Dr. | 19,800 | |||
Rebate on bill A/c | Dr. | 200 | ||||
To Bills Receivable A/c | 20,000 | |||||
(Muskan’s acceptance retired one month before
maturity and allowed rebate at 12% p.a.) |
||||||
Books of Muskan
Journal |
||||||||||
Date | Particulars | L.F. | Debit ₹ | Credit₹ | ||||||
2016 | ||||||||||
01 Jan | Purchases A/c | Dr. | 20,000 | |||||||
To Neha | 20,000 | |||||||||
(Goods purchased from Neha) | ||||||||||
01 Jan | Neha | Dr. | 20,000 | |||||||
To Bills Payable A/c | 20,000 | |||||||||
(Bill drawn by Neha payable after 2 months
accepted) |
||||||||||
04 Feb | Bills Payable A/c | Dr. | 20,000 | |||||||
To Cash A/c | 19,800 | |||||||||
To Rebate on Bills A/c | 200 | |||||||||
(Bill paid one month before maturity and received
Rebate at 12% p.a.) |
||||||||||
- On Jan 15, 2016 Raghu sold goods worth ₹ 35,000 to Devendra and drew up to the latter three bills of exchanges. The first bill was for ₹ 5,000 payable after one month, the second bill was for ₹ 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 ₹ 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 ₹ 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 ₹ 200 as noting charges. Five days after the dishonour of the bill Devendra paid the entire amount due to Raghu along with interest ₹ 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.
The journal entries are as follows:
Books of Raghu
Journal |
|||||||
Date | Particulars | L.F. | Debit ₹ | Credit₹ | |||
2016 | |||||||
15 Jan | Devendra | Dr. | 35,000 | ||||
To Sales A/c | 35,000 | ||||||
(Goods traded to Devendra) | |||||||
15 Jan | Bills Receivable A/c | Dr. | 35,000 | ||||
To Devendra | 35,000 | ||||||
(Three bills received from Devendra–the first bill ₹ 5,000,
the second bill ₹ 20,000, the third bill ₹ 10,000) |
|||||||
15 Jan | Dewan | Dr. | 5,200 | ||||
To Bills Receivable A/c | 5,000 | ||||||
To Discount Received A/c | 200 | ||||||
(The first bill endorsed to Dewan in full settlement
of amount due to him) |
|||||||
15 Jan | Bank A/c | Dr. | 19,700 | ||||
Discount A/c | Dr. | 300 | |||||
To Bills Receivable A/c | 20,000 | ||||||
(The second bill discounted with bank at 6% p.a.) | |||||||
18 Apr | Devendra | Dr. | 20,030 | ||||
To Bank A/c | 20,030 | ||||||
(The second bill dishonoured and bank paid
₹ 30 for noting charges) |
|||||||
14 May | Bill Sent for Collection A/c | Dr. | 10,000 | ||||
To Bills Receivable A/c | 10,000 | ||||||
(The third bill sent to bank for collection) | |||||||
18 May | Devendra | Dr. | 10,200 | ||||
To Bill sent for collection A/c | 10,000 | ||||||
To Bank A/c | 200 | ||||||
(The third bill dishonoured and bank paid ₹ 200
as noting charges) |
|||||||
23 May | Devendra | Dr. | 1,000 | ||||
To Interest A/c | 1,000 | ||||||
(Interest due to Devendra on account of bills
dishonoured) |
|||||||
23 May | Cash A/c | Dr. | 31,230 | ||||
To Devendra | 31,230 | ||||||
(Cash received from Devendra) | |||||||
Ledger
Devendra’s Account |
|||||||
Dr. | Cr. | ||||||
Date | Particulars | J.F. | Amount ₹ | Date | Particulars | J.F. | Amount ₹ |
2016 | 2016 | ||||||
15 Jan | Sales | 35,000 | 15 Jan | Bills Receivable | 35,000 | ||
18 Apr | Bank | 20,030 | 23 May | Cash | 31,230 | ||
18 May | Bills Sent for Collection | 10,000 | |||||
18 May | Bank | 200 | |||||
23 May | Interest | 1,000 | |||||
66,230 | 66,230 | ||||||
Books of Devendra
Journal |
|||||||
Date | Particulars | L.F. | Debit ₹ | Credit₹ | |||
2016 | |||||||
15 Jan | Purchases A/c | Dr. | 35,000 | ||||
To Raghu | 35,000 | ||||||
(Goods purchased from Raghu) | |||||||
15 Jan | Raghu | Dr. | 35,000 | ||||
To Bills Payable A/c | 35,000 | ||||||
(Three bills drawn by Raghu accepted: the first bill for
₹ 5,000 payable after one month, the second for ₹ 20,000 payable after 3 months and the third for ₹ 10,000 payable after 4 months) |
|||||||
18 Feb | Bills Payable A/c | Dr. | 5,000 | ||||
To Cash | 5,000 | ||||||
(The first bill discharged on the due date) | |||||||
18 Apr | Bills Payable A/c | Dr. | 20,000 | ||||
Noting Charges A/c | Dr. | 30 | |||||
To Raghu | 20,030 | ||||||
(The second bill dishonoured and Noting Charges
₹ 30) |
|||||||
18 May | Bills Payable A/c | Dr. | 10,000 | ||||
Noting Charges A/c | Dr. | 200 | |||||
To Raghu | 10,200 | ||||||
(The third bill dishonoured and Noting Charges ₹ 200) | |||||||
23 May | Interest A/c | Dr. | 1,000 | ||||
To Raghu | 1,000 | ||||||
(Interest charged ₹ 1,000 on account of
bills dishonoured) |
|||||||
23 May | Cash A/c | Dr. | 31,230 | ||||
To Bank Loan A/c | 31,230 | ||||||
(Bank loan taken for settling Raghu’s account) | |||||||
23 May | Raghu | Dr. | 31,230 | ||||
To Cash A/c | 31,230 | ||||||
(Cash paid to Raghu) | |||||||
Ledger
Raghu’s Account |
|||||||
Dr. | Cr. | ||||||
Date | Particulars | J.F. | Amount
₹ |
Date | Particulars | J.F. | Amount
₹ |
2016 | 2016 | ||||||
15 Jan | Bills Payable | 35,000 | 15 Jan | Purchases | 35,000 | ||
23 May | Cash | 31,230 | 18 Apr | Bills Payable | 20,000 | ||
18 Apr | Noting Charges | 30 | |||||
18 May | Bills Payable | 10,000 | |||||
18 May | Noting Charges | 200 | |||||
18 May | Interest | 1,000 | |||||
66,230 | 66,230 | ||||||
Books of Dewan
Journal |
||||||||
Date | Particulars | L.F. | Debit ₹ | Credit₹ | ||||
2016 | ||||||||
15 Jan | Bills Receivable A/c | Dr. | 5,000 | |||||
Discount Allowed A/c | Dr. | 200 | ||||||
To Raghu | 5,200 | |||||||
(Bill Receivable received from Raghu for one month and
allowed him discount of ₹ 200) |
||||||||
18 Feb | Cash A/c | Dr. | 5,000 | |||||
To Bills Receivable A/c | 5,000 | |||||||
(Bill met on maturity) | ||||||||
- Vimal purchased goods ₹ 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.
- Five days before its maturity the bill was sent by Kamal to his bank for collection.
The necessary journal entries are shown below:
(i) : The bill was retained by Kamal till the date of its maturity
Books of Kamal
Journal |
||||||
Date | Particulars | L.F. | Debit ₹ | Credit₹ | ||
2016 | ||||||
15 Jan | Vimal | Dr. | 25,000 | |||
To Sales A/c | 25,000 | |||||
(Goods traded to Vimal) | ||||||
15 Jan | Bills Receivable A/c | Dr. | 25,000 | |||
To Vimal | 25,000 | |||||
(Vimal’s acceptance received) | ||||||
18 Mar | Vimal | Dr. | 25,000 | |||
To Bills Receivable A/c | 25,000 | |||||
(Vimal acceptance dishonoured) | ||||||
Books of Vimal
Journal |
|||||||
Date | Particulars | L.F. | Debit
Amount ₹ |
Credit
Amount ₹ |
|||
2016 | |||||||
15 Jan | Purchases A/c | Dr. | 25,000 | ||||
To Kamal | 25,000 | ||||||
(Goods purchased from Kamal) | |||||||
15 Jan | Kamal | Dr. | 25,000 | ||||
To Bills Payable A/c | 25,000 | ||||||
(Bill drawn by Kamal accepted) | |||||||
18 Mar | Bills Payable A/c | Dr. | 25,000 | ||||
To Kamal | 25,000 | ||||||
(Bill drawn by Kamal dishonoured) | |||||||
(ii) : The bill was immediately discounted by Kamal with his bank @ 6% p.a.
Books of Kamal
Journal |
||||||
Date | Particulars | L.F. | Debit ₹ | Credit₹ | ||
2016 | ||||||
15 Jan | Vimal | Dr. | 25,000 | |||
To Sales A/c | 25,000 | |||||
(Goods traded to Vimal) | ||||||
15 Jan | Bills Receivable A/c | Dr. | 25,000 | |||
To Vimal | 25,000 | |||||
(Vimal’s acceptance received) | ||||||
15 Jan | Bank A/c | Dr. | 24,750 | |||
Discount A/c | Dr. | 250 | ||||
To Bills Receivable A/c | 25,000 | |||||
(Vimal’s acceptance discounted at 6% p.a. with
bank) |
||||||
18 Mar | Vimal | Dr. | 25,000 | |||
To Bank A/c | 25,000 | |||||
(Vimal’s acceptance dishonoured) | ||||||
Books of Vimal
Journal |
|||||||
Date | Particulars | L.F. | Debit ₹ | Credit₹ | |||
2016 | |||||||
15 Jan | Purchases A/c | Dr. | 25,000 | ||||
To Kamal | 25,000 | ||||||
(Goods purchased from Kamal) | |||||||
15 Jan | Kamal | Dr. | 25,000 | ||||
To Bills Payable A/c | 25,000 | ||||||
(Bill drawn by Kamal accepted) | |||||||
18 Mar | Bills Payable A/c | Dr. | 25,000 | ||||
To Kamal | 25,000 | ||||||
(Bill drawn by Kamal dishonoured) | |||||||
Case (iii) : The bill was endorsed by Kamal in favour of his creditor Sharad
Books of Kamal
Journal |
|||||||
Date | Particulars | L.F. | Debit ₹ | Credit₹ | |||
2016 | |||||||
15 Jan | Vimal | Dr. | 25,000 | ||||
To Sales A/c | 25,000 | ||||||
(Goods traded to Vimal) | |||||||
15 Jan | Bills Receivable A/c | Dr. | 25,000 | ||||
To Vimal | 25,000 | ||||||
(Vimal’s acceptance received) | |||||||
15 Jan | Sharad | Dr. | 25,000 | ||||
To Bills Receivable A/c | 25,000 | ||||||
(Vimal’s acceptance endorsed to Sharad) | |||||||
18 Mar | Vimal | Dr. | 25,000 | ||||
To Sharad | 25,000 | ||||||
(Vimal’s acceptance endorsed to Kamal dishonoured) | |||||||
Books of Vimal
Journal |
|||||||
Date | Particulars | L.F. | Debit ₹ | Credit₹ | |||
2016 | |||||||
15 Jan | Purchases A/c | Dr. | 25,000 | ||||
To Kamal | 25,000 | ||||||
(Goods purchased from Kamal) | |||||||
15 Jan | Kamal | Dr. | 25,000 | ||||
To Bills Payable A/c | 25,000 | ||||||
(Bill drawn by Kamal accepted) | |||||||
18 Mar | Bills Payable A/c | Dr. | 25,000 | ||||
To Kamal | 25,000 | ||||||
(Bill drawn by Kamal dishonoured) | |||||||
Case (IV): Five days before its maturity the bill was sent by Kamal to his bank for collection
Books of Kamal
Journal |
||||||
Date | Particulars | L.F. | Debit ₹ | Credit₹ | ||
2016 | ||||||
15 Jan | Vimal | Dr. | 25,000 | |||
To Sales A/c | 25,000 | |||||
(Goods traded to Vimal) | ||||||
15 Jan | Bills Receivable A/c | Dr. | 25,000 | |||
To Vimal | 25,000 | |||||
(Vimal’s acceptance received, payable after two months) | ||||||
Mar.13 | Bill Sent for Collection A/c | Dr. | 25,000 | |||
To Bills Receivable A/c | 25,000 | |||||
(Vimal’s acceptance sent to bank for collection) | ||||||
18 Mar | Vimal | Dr. | 25,000 | |||
To Bill Sent for Collection | 25,000 | |||||
(Vimal’s acceptance dishonoured) | ||||||
Books of Vimal
Journal |
|||||||
Date | Particulars | L.F. | Debit ₹ | Credit₹ | |||
Case (iii) | |||||||
2016 | |||||||
15 Jan | Purchases A/c | Dr. | 25,000 | ||||
To Kamal | 25,000 | ||||||
(Goods purchased from Kamal) | |||||||
15 Jan | Kamal | Dr. | 25,000 | ||||
To Bills Payable A/c | 25,000 | ||||||
(Bill drawn by Kamal accepted) | |||||||
18 Mar | Bills Payable A/c | Dr. | 25,000 | ||||
To Kamal | 25,000 | ||||||
(Bill drawn by Kamal dishonoured) | |||||||
- Abdula sold goods to Tahir on Jan 17, 2017 for ₹ 18,000. He drew a bill of exchange for the same amount on Tahir for 45 days. On the same date Tahir accepted the bill and returned it to Abdulla. On the due date Abdulla presented the bill to Tahir which was dishonoured. Abdulla paid ₹ 40 as noting charges. Five days after the dishonour of his acceptance Tahir settled his debt by making a payment of ₹ 18,700 including interest and noting charges. Record the necessary journal entries in the books of Abdulla and Tahir. Also prepare Tahir’s account in the books of Abdulla and Abdulla’s account in the books of Tahir.
The necessary journal entries are shown below:
Books of Abdula
Journal |
|||||||
Date | Particulars | L.F. | Debit ₹ | Credit₹ | |||
2017 | |||||||
17 Jan | Tahir | Dr. | 18,000 | ||||
To Sales A/c | 18,000 | ||||||
(Goods traded to Tahir) | |||||||
17 Jan | Bills Receivable A/c | Dr. | 18,000 | ||||
To Tahir | 18,000 | ||||||
(Tahir’s acceptance received) | |||||||
06 Mar | Tahir | Dr. | 18,040 | ||||
To Bills Receivable A/c | 18,000 | ||||||
To Cash | 40 | ||||||
(Tahir’s acceptance dishonoured and ₹ 40 paid as
noting charges) |
|||||||
06 Mar | Tahir | Dr. | 660 | ||||
To Interest A/c | 660 | ||||||
(Interest charged from Tahir on account of bill
dishonoured) |
|||||||
12 Mar | Cash A/c | Dr. | 18,700 | ||||
To Tahir | 18,700 | ||||||
(Tahir cleared his account by paying cash) | |||||||
Ledger
Tahir’s Account |
|||||||
Dr. | Cr. | ||||||
Date | Particulars | J.F. | Amount ₹ | Date | Particulars | J.F. | Amount ₹ |
2017 | 2017 | ||||||
17 Jan | Sales | 18,000 | 17 Jan | Bills Receivable | 18,000 | ||
06 Mar | Bills Receivable | 18,000 | 11 Mar | Cash | 18,700 | ||
06 Mar | Cash | 40 | |||||
06 Mar | Interest | 660 | |||||
36,700 | 36,700 | ||||||
Books of Tahir
Journal |
||||||
Date | Particulars | L.F. | Debit ₹ | Credit₹ | ||
2017 | ||||||
17 Jan | Purchases A/c | Dr. | 18,000 | |||
To Abdula | 18,000 | |||||
(Goods purchased from Abdula) | ||||||
17 Jan | Abdula | Dr. | 18,000 | |||
To Bills Payable A/c | 18,000 | |||||
(Bill drawn by Abdula accepted, payable after 15 days) | ||||||
06 Mar | Bills Payable A/c | Dr. | 18,000 | |||
Noting Charges A/c | Dr. | 40 | ||||
To Abdula | 18,040 | |||||
(Abula’s bill dishonoured) | ||||||
07 Mar | Interest A/c | Dr. | 660 | |||
To Abdula | 660 | |||||
(Interest charged on account of bill dishonoured) | ||||||
11 Mar | Abdula | Dr. | 18,700 | |||
To Cash A/c | 18,700 | |||||
(Cash paid to Abdula) | ||||||
Ledger
Abdula’sAccount |
|||||||
Dr. | Cr. | ||||||
Date | Particulars | J.F. | Amount ₹ | Date | Particulars | J.F. | Amount ₹ |
2017 | 2017 | ||||||
17 Jan | Bills Payable | 18,000 | 17 Jan | Purchases | 18,000 | ||
11 Mar | Cash | 18,700 | 06 Mar | Bills Payable | 18,000 | ||
06 Mar | Noting Charges | 40 | |||||
06 Mar | Interest | 660 | |||||
36,700 | 36,700 | ||||||
- Asha sold goods worth ₹ 19,000 to Nisha on March 02, 2017. ₹ 4,000 were paid by Nisha immediately and for the balance she accepted a bill of exchange drawn upon her by Asha payable after three months. Asha discounted the bill immediately with her bank. On the due date Nisha dishonoured the bill and the bank paid ₹ 30 as noting charges.
Record the necessary journal entries in the books of Asha and Nisha.
The necessary journal entries are presented below
Books of Asha
Journal |
|||||||
Date | Particulars | L.F. | Debit ₹ | Credit₹ | |||
2017 | |||||||
02 Mar | Nisha | Dr. | 19,000 | ||||
To Sales A/c | 19,000 | ||||||
(Goods traded to Nisha) | |||||||
02 Mar | Cash A/c | Dr. | 4,000 | ||||
Bills Receivable A/c | Dr. | 15,000 | |||||
To Nisha | 19,000 | ||||||
(Cash and Nisha’s acceptance received) | |||||||
02 Mar | Bank A/c | Dr. | 14,635 | ||||
Discount A/c | Dr. | 375 | |||||
To Bills Receivable A/c | 15,000 | ||||||
(Nisha’s acceptance discounted with bank at 10% p.a.) | |||||||
Note: In this question rate of discount is not
given, the rate of discount (10% p.a.) has been assumed). |
|||||||
05 Jun | Nisha | Dr. | 15,030 | ||||
To Bank A/c | 15,030 | ||||||
(Nisha’s acceptance dishonoured and bank
paid ₹ 30 as noting charges) |
|||||||
Books of Nisha
Journal |
||||||||
Date | Particulars | L.F. | Debit
₹ |
Credit₹ | ||||
2017 | ||||||||
02 Mar | Purchases A/c | Dr. | 19,000 | |||||
To Asha | 19,000 | |||||||
(Goods purchased from Asha) | ||||||||
02 Mar | Asha | Dr. | 19,000 | |||||
To Bills Payable A/c | 15,000 | |||||||
To Cash A/c | 4,000 | |||||||
(Asha’s bill accepted payable after three month and
₹ 4,000 paid in cash) |
||||||||
Jun.05 | Bills Payable A/c | Dr. | 15,000 | |||||
Noting Charges A/c | Dr. | 30 | ||||||
To Asha | 15,030 | |||||||
(Asha’s bill dishonoured) | ||||||||
- On Feb. 02, 2017, Verma purchased from Sharma goods for ₹ 17,500. Verma paid ₹ 2,500 immediately and for the balance gave a promissory note to Sharma payable after 60 days. Sharma immediately endorsed the promissory note in favour of his creditor.
Gupta for the full settlement of a debt of ₹ 15,400. On the due date of the bill Gupta presented the bill to Verma which the latter dishonoured and Gupta paid ₹ 5,000 noting charges. On the same date Gupta informed Sharma about the dishonour of the bill. Sharma settled his debt to Gupta by cheque for ₹ 15,500 which includes noting charges and interest. Verma settled Sharma’s claim by cheque for the same amount.
Record the necessary journal entries is the books of Sharma, Gupta and Verma for the above transaction and prepare Verma’s and Gupta’s accounts in the books of Sharma. Sharma’s account in the books of Verma. And also Sharma’s account in the books of Gupta.
The necessary journal entries are given below:
Books of Sharma
Journal |
|||||||
Date | Particulars | L.F. | Debit ₹ | Credit₹ | |||
2017 | |||||||
02 Feb | Verma | Dr. | 17,500 | ||||
To Sales A/c | 17,500 | ||||||
(Goods traded to Verma) | |||||||
02 Feb | Cash A/c | Dr. | 2,500 | ||||
Bills Receivable A/c | Dr. | 15,000 | |||||
To Verma | 17,500 | ||||||
(Cash ₹ 2,500 and Promissory Note ₹ 15,000 received
from Verma for 60 days) |
|||||||
02 Feb | Gupta A/c | Dr. | 15,400 | ||||
To Bills Receivable A/c | 15,000 | ||||||
To Discount Received A/c | 400 | ||||||
(Promissory Note endorsed to Gupta in full settlement
of amount due to him) |
|||||||
05 Apr | Discount Received A/c | Dr. | 400 | ||||
Verma | Dr. | 15,050 | |||||
To Gupta | 15,450 | ||||||
(Promissory Note issued by Verma dishonoured
and Gupta paid ₹ 50 as noting charges) |
|||||||
Note: In this question ₹ 5,000 is given as noting charges,
there is mistake. Here ₹ 50 has been taken as noting charges instead of ₹ 5,000). |
|||||||
06 Apr | Interest A/c | Dr. | 50 | ||||
To Gupta | 50 | ||||||
(Interest of ₹ 50 debited to Gupta, on account of
dishonour of Promissory Note) |
|||||||
06 Apr | Gupta | Dr. | 15,500 | ||||
To Bank A/c | 15,500 | ||||||
(Gupta’s A/c settled) | |||||||
06 Apr | Bank A/c | Dr. | 15,050 | ||||
To Verma | 15,050 | ||||||
(Cheque received from Verma for the amount due from him) | |||||||
Ledger
Verma’s Account |
|||||||
Dr. | Cr. | ||||||
Date | Particulars | J.F. | Amount ₹ | Date | Particulars | J.F. | Amount ₹ |
2017 | 2017 | ||||||
02 Feb | Sales | 17,500 | 02 Feb | Cash | 2,500 | ||
06 Apr | Gupta | 15,050 | 02 Feb | Bills Receivable | 15,000 | ||
06 Apr | Bank | 15,050 | |||||
32,550 | 32,550 | ||||||
Gupta’s Account | |||||||
Dr. | Cr. | ||||||
Date | Particulars | J.F. | Amount
₹ |
Date | Particulars | J.F. | Amount
₹ |
2017 | 2017 | ||||||
02 Feb | B/R | 15,000 | 01 Apr | Balance b/d | 15,400 | ||
02 Feb | Discount Received | 400 | 06 Apr | Verma | 15,050 | ||
02 Feb | Bank | 15,500 | 06 Apr | Discount Reserved | 400 | ||
06 Apr | Interest | 50 | |||||
30,900 | 30,900 | ||||||
Books of Verma
Journal |
||||||||
Date | Particulars | L.F. | Debit ₹ | Credit₹ | ||||
2017 | ||||||||
02 Feb | Purchases A/c | Dr. | 17,500 | |||||
To Sharma | 17,500 | |||||||
(Goods purchased from Sharma) | ||||||||
02 Feb | Sharma | Dr. | 17,500 | |||||
To Bills Payable A/c | 15,000 | |||||||
To Cash A/c | 2,500 | |||||||
(Cash ₹ 2,500 paid and Promissory Note made for
the balance) |
||||||||
06 Apr | Bills Payable A/c | Dr. | 15,000 | |||||
Noting Charges A/c | Dr. | 50 | ||||||
To Sharma | 15,050 | |||||||
(Promissory Note dishonoured on maturity) | ||||||||
06 Apr | Sharma | Dr. | 15,050 | |||||
To Bank A/c | 15,050 | |||||||
(Payment made to Sharma through cheque) | ||||||||
Ledger
Sharma’s Account |
|||||||
Dr. | Cr. | ||||||
Date | Particulars | J.F. | Amount
₹ |
Date | Particulars | J.F. | Amount
₹ |
2017 | 2017 | ||||||
02 Feb | Cash | 2,500 | 02 Feb | Purchases | 17,500 | ||
02 Feb | Bills Payable | 15,000 | 06 Apr | Bills Payable | 15,000 | ||
06 Apr | Bank | 50 | 06 Apr | Noting Charges | 50 | ||
30,900 | 30,900 | ||||||
Books of Gupta
Journal |
||||||||
Date | Particulars | L.F. | Debit ₹ | Credit₹ | ||||
2017 | ||||||||
02 Feb | Bills Receivable A/c | Dr. | 15,000 | |||||
Discount Allowed A/c | Dr. | 400 | ||||||
To Sharma | 15,400 | |||||||
(Promissory Note ₹ 15,000 received from Sharma in
full settlement for 60 days) |
||||||||
06 Apr | Sharma | Dr. | 15,450 | |||||
To Bills Receivable A/c | 15,000 | |||||||
To Discount Allowed A/c | 400 | |||||||
To Bank A/c | 50 | |||||||
(Promissory note established from Sharma, dishonoured) | ||||||||
06 Apr | Sharma | Dr. | 50 | |||||
To Interest A/c | 50 | |||||||
(Interest ₹ 50 credited on account of Promissory Note
dishonoured) |
||||||||
06 Apr | Bank A/c | Dr. | 15,500 | |||||
To Sharma | 15,500 | |||||||
(Cheque received from Sharma) | ||||||||
Ledger
Sharma’s Account |
|||||||
Dr. | Cr. | ||||||
Date | Particulars | J.F. | Amount
₹ |
Date | Particulars | J.F. | Amount
₹ |
2017 | 2017 | ||||||
01 Feb | Balance b/d | 15,400 | 02 Feb | Bills Receivable | 15,000 | ||
06 Apr | Bills Receivable | 15,000 | 02 Feb | Discount Allowed | 400 | ||
06 Apr | Discount Allowed | 4,000 | 06 Apr | Bank | 15,500 | ||
06 Apr | Bank | 50 | |||||
06 Apr | Interest | 50 | |||||
30,900 | 30,900 | ||||||
- Lilly sold goods to Mathew on 1.3.2017 for ₹ 12,000 and drew upon Mathew a bill of exchange for the same amount payable after two months. Lilly immediately discounted the bill with her bank at 9% p.a. The maturity date of the bill was a non-business day (holiday), therefore, Lilly had to present the bill as per the provisions of the Indian Instruments Act.1881. The bill was dishonoured by Mathew and Lilly paid ₹ 45 as noting charges. Mathew settled the claim of Lilly five days after the dishonour of the bill by a cheque, which includes interest @ 12% for the term of the bill. Journalise the above transactions in the books of Lilly and Mathew and prepare Mathew’s account in the books of Lilly and Lilly’s account in the books of Mathew.
The transactions are journalized as follows:
Books of Lilly
Journal |
||||||||||
Date | Particulars | L.F. | Debit ₹ | Credit₹ | ||||||
2017 | ||||||||||
01 Mar | Mathew | Dr. | 12,000 | |||||||
To Sales A/c | 12,000 | |||||||||
(Goods traded to Mathew) | ||||||||||
01 Mar | Bills Receivable A/c | Dr. | 12,000 | |||||||
To Mathew | 12,000 | |||||||||
(Mathew’s acceptance payable after two months received) | ||||||||||
01 Mar | Bank A/c | Dr. | 11,820 | |||||||
Discount A/c | Dr. | 180 | ||||||||
To Bills Receivable A/c | 12,000 | |||||||||
(Mathew’s bill discounted at 9% p.a.) | ||||||||||
03 May | Mathew A/c | Dr. | 12,045 | |||||||
To Bank A/c | 12,045 | |||||||||
(Mathew’s acceptance dishonoured bank paid ₹ 45 as
noting charges) |
||||||||||
Note: In this question, May 04 has been considered as
Holiday, so the date of maturity will be 03 May 2017 in place of May 04, 2017. |
||||||||||
08 May | Mathew | Dr. | 241 | |||||||
To Interest A/c | 241 | |||||||||
(Interest @ 12% credited to Mathew on account of bill dishonoured) | ||||||||||
08 May | Bank A/c | Dr. | 12,286 | |||||||
To Mathew | 12,286 | |||||||||
(Cheque received from Mathew for the amount due from him) | ||||||||||
Ledger
Mathew’s Account |
|||||||
Dr. | Cr. | ||||||
Date | Particulars | J.F. | Amount ₹ | Date | Particulars | J.F. | Amount ₹ |
2017 | 2017 | ||||||
01 Mar | Sales | 12,000 | 01 Mar | Bills Receivable | 12,000 | ||
03 May | Bank | 12,045 | 08 May | Bank | 12,286 | ||
08 May | Interest | 241 | |||||
24,286 | 24,286 | ||||||
Books of Mathew
Journal |
||||||
Date | Particulars | L.F. | Debit ₹ | Credit₹ | ||
2017 | ||||||
01 Mar | Purchases A/c | Dr. | 12,000 | |||
To Lilly | 12,000 | |||||
(Goods purchased from Lilly) | ||||||
01 Mar | Lilly | Dr. | 12,000 | |||
To Bills Payable A/c | 12,000 | |||||
(Lilly’s acceptance payable after two months accepted) | ||||||
03 May | Bills Payable A/c | Dr. | 12,000 | |||
Noting Charges A/c | Dr. | 45 | ||||
To Lilly | 12,045 | |||||
(Bill drawn by Lilly dishonoured) | ||||||
08 May | Interest A/c | Dr. | 241 | |||
To Lilly | 241 | |||||
(Interest charged @ 12% from Lilly on account of bill dishonoured) | ||||||
08 May | Lilly | Dr. | 12,286 | |||
To Bank A/c | 12,286 | |||||
(Amount paid to Lilly through cheque) | ||||||
Ledger
Lilly’s Account |
|||||||
Dr. | Cr. | ||||||
Date | Particulars | J.F. | Amount ₹ | Date | Particulars | J.F. | Amount ₹ |
2017 | 2017 | ||||||
01 Mar | Bills Payable | 12,000 | 01 Mar | Purchases | 12,000 | ||
09 May | Bank | 12,286 | 03 May | Bills Payable | 12,000 | ||
03 May | Noting charges | 45 | |||||
08 May | Interest | 241 | |||||
24,286 | 24,286 | ||||||
- Kapil purchased goods for ₹ 21,000 from Gaurav on 1.2.2017 and accepted a bill of exchange drawn by Gaurav for the same amount. The bill was payable after one month. On 25.2.2017 Gaurav sent the bill to his bank for collection. The bill was duly presented by the bank. Kapil dishonoured the bill and the bank paid ₹ 100 as noting charges. Record the necessary journal entries for the above transactions in the books of Kapil and Gourav.
The necessary journal entries are shown below:
Books of Gaurav
Journal |
||||||
Date | Particulars | L.F. | Debit ₹ | Credit₹ | ||
2017 | ||||||
01 Feb | Kapil | Dr. | 21,000 | |||
To Sales A/c | 21,000 | |||||
(Goods traded to Kapil) | ||||||
01 Feb | Bills Receivable A/c | Dr. | 21,000 | |||
To Kapil | 21,000 | |||||
(Kapil’s acceptance received) | ||||||
25 Feb | Bills Sent for Collection A/c | Dr. | 21,000 | |||
To Bills Receivable A/c | 21,000 | |||||
(Bill Receivable sent to bank for collection) | ||||||
04 Mar | Kapil | Dr. | 21,100 | |||
To Bill Sent for Collection A/c | 21,000 | |||||
To Bank A/c | 100 | |||||
(Kapil’s acceptance dishonoured) | ||||||
Books of Kapil
Journal |
|||||||
Date | Particulars | L.F. | Debit ₹ | Credit₹ | |||
2017 | |||||||
01 Feb | Purchases A/c | Dr. | 21,000 | ||||
To Gaurav | 21,000 | ||||||
(Goods purchased from Gaurav) | |||||||
01 Feb | Gaurav | Dr. | 21,000 | ||||
To Bills Payable A/c | 21,000 | ||||||
(Bill drawn by Gaurav payable after one month
accepted) |
|||||||
04 Mar | Bills Payable A/c | Dr. | 21,000 | ||||
Noting Charges A/c | Dr. | 100 | |||||
To Gaurav | 21,100 | ||||||
(Bill drawn by Kapil dishonoured) | |||||||
- On Feb. 14, 2017 Rashmi sold good ₹ 7,500 to Alka. Alka paid ₹ 500 in cash and for the bank balance accepted a bill of exchange drawn upon her by Rashmi payable after two months. On 10 Apr, 2017 Alka approached Rashmi to cancel the bill since she was short of funds. She further requested Rashmi to accept ₹ 2,000 in cash and draw a new bill for the balance including interest ₹ 500. Rashmi accepted Alka’s request and drew a new bill for the amount due payable after 2 months. The bill was accepted by Alka. The new bill was duly met by Alka on maturity.
Record the necessary journal entries in the books of Rashmi and Alka and prepared Alka’s account in the books of Rashmi’s and Rashmi’s account in the books of Alka’s.
The necessary journal entries are recorded below:
Books of Rashmi
Journal |
|||||||||
Date | Particulars | L.F. | Debit ₹ | Credit₹ | |||||
2017 | |||||||||
14 Feb | Alka | Dr. | 7,500 | ||||||
To Sales A/c | 7,500 | ||||||||
(Goods traded to Alka) | |||||||||
14 Feb | Cash A/c | Dr. | 500 | ||||||
Bills Receivable A/c | Dr. | 7,000 | |||||||
To Alka | 7,500 | ||||||||
(Cash received ₹ 500 and the bill accepted by Alka) | |||||||||
10 Apr | Alka | Dr. | 7,000 | ||||||
To Bills Receivable A/c | 7,000 | ||||||||
(Alka got the bill cancelled) | |||||||||
10 Apr | Cash A/c | Dr. | 2,000 | ||||||
To Alka | 2,000 | ||||||||
(Received cash from Alka) | |||||||||
10 Apr | Alka | Dr. | 500 | ||||||
To Interest A/c | 500 | ||||||||
(Interest charged on the amount due from Alka) | |||||||||
10 Apr | Bills Receivable A/c | Dr. | 5,500 | ||||||
To Alka | 5,500 | ||||||||
(Alka’s acceptance payable of two months received) | |||||||||
13 June | Cash A/c | Dr. | 5,500 | ||||||
To Bills Receivable A/c | 5,500 | ||||||||
(Alka’s acceptance met on due date) | |||||||||
Ledger
Alka’s Account |
|||||||
Dr. | Cr. | ||||||
Date | Particulars | J.F. | Amount ₹ | Date | Particulars | J.F. | Amount ₹ |
2017 | 2017 | ||||||
14 Feb | Sales | 7,500 | 14 Feb | Cash | 500 | ||
10 Apr | Bills Receivable | 7,000 | 14 Feb | Bills Receivable | 7,000 | ||
10 Apr | Interest | 500 | 10 Apr | Cash | 2,000 | ||
10 Apr | Bills Receivable | 5,500 | |||||
15,000 | 15,000 | ||||||
Books of Alka
Journal |
|||||||
Date | Particulars | L.F. | Debit ₹ | Credit₹ | |||
2017 | |||||||
14 Feb | Purchases A/c | Dr. | 7,500 | ||||
To Rashmi | 7,500 | ||||||
(Goods purchased from Rashmi) | |||||||
14 Feb | Rashmi | Dr. | 7,500 | ||||
To Cash A/c | 500 | ||||||
To Bills Payable A/c | 7,000 | ||||||
(Cash paid to Rashmi ₹ 500 and a bill for ₹ 7,000
drawn by Rashmi accepted) |
|||||||
10 Apr | Bills Payable A/c | Dr. | 7,000 | ||||
To Rashmi | 7,000 | ||||||
(Bill cancelled before maturity) | |||||||
10 Apr | Rashmi | Dr. | 2,000 | ||||
To Cash A/c | 2,000 | ||||||
(Cash paid to Rashmi) | |||||||
10 Apr | Interest A/c | Dr. | 500 | ||||
To Rashmi | 500 | ||||||
(Interest due to Rashmi) | |||||||
10 Apr | Rashmi | Dr. | 5,500 | ||||
To Bills Payable A/c | 5,500 | ||||||
(Rashmi’s acceptance payable after two months
accepted) |
|||||||
13 June | Bills Payable A/c | Dr. | 5,500 | ||||
To Cash A/c | 5,500 | ||||||
(The bill met on due date) | |||||||
Ledger
Rashmi’s Account |
|||||||
Dr. | Cr. | ||||||
Date | Particulars | J.F. | Amount ₹ | Date | Particulars | J.F. | Amount ₹ |
2017 | 2017 | ||||||
14 Feb | Cash | 500 | 14 Feb | Purchases | 7,500 | ||
14 Feb | Bills Payable | 7,000 | 10 Apr | Bills Payable | 7,000 | ||
10 Apr | Cash | 2,000 | 10 Apr | Interest | 500 | ||
10 Apr | Bills Payable | 5,500 | |||||
15,000 | 15,000 | ||||||
- Nikhil sold goods for ₹ 23,000 to Akhil on Dec. 01, 2017. He drew upon Akhil a bill of exchange for the same amount payable after 2 months. Akhil accepted the bill and sent it back to Nikhil. Nikhil discounted the bill immediately with his bank @12 p.a. On the due date Akhil dishonoured the bill of exchange and the bank paid ₹ 100 as noting charges. Akhil requested Nikhil to draw a new bill upon him with interest @10% p.a. which he agreed. The new bill was payable after two months. A week before the maturity of the second bill Akhil requested Nikhil to cancel the second bill. He further requested to accept ₹ 10,000 in cash immediately and drew a third bill upon him including interest of ₹ 500. Nikhil agreed to Akhil’s request. The third bill was payable after one month. Akhil met the third bill on its maturity. Record the necessary journal entries in the books of Nikhil and Akhil and also prepare Akhil’s account in the books of Nikhil and Nikhil’s account in the books of Akhil.
The necessary journal entries are recorded as follows:
Books of Nikhil
Journal |
|||||||||
Date | Particulars | L.F. | Debit ₹ | Credit₹ | |||||
2017 | |||||||||
01 Dec | Akhil | Dr. | 23,000 | ||||||
To Sales A/c | 23,000 | ||||||||
(Goods traded to Akhil) | |||||||||
01 Dec | Bills Receivable A/c | Dr. | 23,000 | ||||||
To Akhil | 23,000 | ||||||||
(Akhil’s acceptance received) | |||||||||
01 Dec | Bank A/c | Dr. | 22,540 | ||||||
Discount A/c | Dr. | 460 | |||||||
To Bills Receivable A/c | 23,000 | ||||||||
(Akhil’s acceptance discounted at 12% p.a with bank) | |||||||||
2018 | |||||||||
04 Feb | Akhil | Dr. | 23,100 | ||||||
To Bank A/c | 23,100 | ||||||||
(Akhil’s acceptance dishonoured, bank paid
₹ 100 as noting charges) |
|||||||||
04 Feb | Akhil | Dr. | 385 | ||||||
To Interest A/c | 385 | ||||||||
(Interest credited on account of bill dishonoured
at 10% p.a. for two months) |
|||||||||
04 Feb | Bills Receivable A/c | Dr. | 23,485 | ||||||
To Akhil | 23,485 | ||||||||
(New acceptance received from Akhil for
next two months received) |
|||||||||
01 Apr | Akhil | Dr. | 23,485 | ||||||
To Bills Receivable A/c | 23,485 | ||||||||
(The second bill cancelled one week before
maturity) |
|||||||||
01 Apr | Cash A/c | Dr. | 10,000 | ||||||
To Akhil | 10,000 | ||||||||
(Cash received from Akhil) | |||||||||
01 Apr | Akhil | Dr. | 500 | ||||||
To Interest A/c | 500 | ||||||||
(Interest due from Akhil for the bill) | |||||||||
01 Apr | Bills Receivable A/c | Dr. | 13,985 | ||||||
To Akhil | 13,985 | ||||||||
(Bill from Akhil received) | |||||||||
May 04 | Cash A/c | Dr. | 13,985 | ||||||
To Bills Receivable A/c | 13,985 | ||||||||
(The third bill met on due date) | |||||||||
Akhil’s Account | |||||||
Dr. | Cr. | ||||||
Date | Particulars | J.F. | Amount ₹ | Date | Particulars | J.F. | Amount ₹ |
2017 | 2017 | ||||||
01 Dec | Sales | 23,000 | 01 Dec | Bills Receivable | 23,000 | ||
2018 | 2018 | ||||||
04 Feb | Bank | 23,100 | 04 Feb | Bills Receivable | 23,485 | ||
04 Feb | Interest | 385 | 01 Apr | Cash | 10,000 | ||
01 Apr | Bills Receivable | 23,485 | 01 Apr | Bills Receivable | 13,985 | ||
01 Apr | Interest | 500 | |||||
70,470 | 70,470 | ||||||
Books of Akhil
Journal |
|||||||
Date | Particulars | L.F. | Debit
₹ |
Credit Amount
₹ |
|||
2017 | |||||||
01 Dec | Purchases A/c | Dr. | 23,000 | ||||
To Nikhil | 23,000 | ||||||
(Goods purchased from Nikhil) | |||||||
01 Dec | Nikhil | Dr. | 23,000 | ||||
To Bills Payable A/c | 23,000 | ||||||
(Bill drawn by Nikhil payable after two months
accepted) |
|||||||
2018 | |||||||
04 Feb | Bills Payable A/c | Dr. | 23,000 | ||||
Noting Charges A/c | Dr. | 100 | |||||
To Nikhil | 23,100 | ||||||
(Bill dishonoured on due date and ₹ 100 paid by
the holder of bill) |
|||||||
04 Feb | Interest A/c | Dr. | 385 | ||||
To Nikhil A/c | 385 | ||||||
(Interest due to Nikhil for the bill dishonoured) | |||||||
04 Feb | Nikhil | Dr. | 23,485 | ||||
To Bills Payable A/c | 23,485 | ||||||
(New bill accepted payable after two months) | |||||||
01 Apr | Bills Payable A/c | Dr. | 23,485 | ||||
To Nikhil | 23,485 | ||||||
(Bill cancelled before maturity) | |||||||
01 Apr | Nikhil | Dr. | 10,000 | ||||
To Cash A/c | 10,000 | ||||||
(Cash paid to Nikhil) | |||||||
01 Apr | Interest A/c | Dr. | 500 | ||||
To Nikhil | 500 | ||||||
(Interest due to Nikhil for bill cancellation) | |||||||
01 Apr | Nikhil | Dr. | 13,985 | ||||
To Bills Payable A/c | 13,985 | ||||||
(New bill accepted payable after one month) | |||||||
May 04 | Bills Payable A/c | Dr. | 13,985 | ||||
To Cash A/c | 13,985 | ||||||
(The third bill met on maturity) | |||||||
Nikhil Account | |||||||
Dr. | Cr. | ||||||
Date | Particulars | J.F. | Amount ₹ | Date | Particulars | J.F. | Amount ₹ |
2017 | 2017 | ||||||
01 Dec | Bills Payable | 23,000 | 01 Dec | Purchases | 23,000 | ||
2018 | 2018 | ||||||
04 Feb | Bills Payable | 23,485 | 04 Feb | Bills Payable | 23,000 | ||
01 Apr | Cash | 10,000 | 04 Feb | Noting Charge | 100 | ||
01 Apr | Bills Payable | 13,985 | 04 Feb | Interest | 385 | ||
01 Apr | Bills Payable | 23,485 | |||||
01 Apr | Interest | 500 | |||||
70,470 | 70,470 | ||||||
- On Jan 01, 2017 Vibha sold goods worth ₹ 18,000 to Sudha and drew upon the latter a bill of exchange for the same amount payable after two months. Sudha accepted Vibha’s draft and returned the same to Vibha after acceptance. Vibha endorsed the bill immediately in favour of her creditor Geeta. Five days before the maturity of the bill Sudha requested Vibha to cancel the bill since she was short of funds. She further requested to draw a new bill upon her including interest of ₹ 200. Vibha accepted Sudha’s request. Vibha took the bill from Geeta by making the payment to her in cash and cancelled the same. Then she drew a new bill upon Sudha as agreed. The new bill was payable after one month. The new bill was duly met by Sudha on maturity. Record the necessary journal entries in the books of Vibha.
The necessary journal entries are recorded as follows:
Books of Vibha
Journal |
||||||
Date | Particulars | L.F. | Debit ₹ | Credit₹ | ||
2017 | ||||||
01 Jan | Sudha | Dr. | 18,000 | |||
To Sales A/c | 18,000 | |||||
(Goods traded to Sudha) | ||||||
01 Jan | Bills Receivable A/c | Dr. | 18,000 | |||
To Sudha | 18,000 | |||||
(Sudha’s acceptance received) | ||||||
01 Jan | Geeta | Dr. | 18,000 | |||
To Bills Receivable A/c | 18,000 | |||||
(Sudha’s acceptance endorsed in favour of Geeta) | ||||||
27 Feb | Sudha | Dr. | 18,000 | |||
To Geeta | 18,000 | |||||
(Sudha cancelled the bill five days before the maturity) | ||||||
27 Feb | Geeta | Dr. | 18,000 | |||
To Cash A/c | 18,000 | |||||
(Cash paid to Geeta) | ||||||
27 Feb | Sudha | 200 | ||||
To Interest A/c | 200 | |||||
(Interest credited to Sudha on account of
cancelling the bill ) |
||||||
27 Feb | Bills Receivable A/c | Dr. | 18,200 | |||
To Sudha | 18,200 | |||||
(New bill received from Sudha) | ||||||
02 Mar | Cash A/c | Dr. | 18,200 | |||
To Sudha | 18,200 | |||||
(Sudha’s acceptance met on due date) | ||||||
- Following was the position of debtor and creditor of Gautam as on 1.1.2017.
Debtors Creditors
₹ ₹
Babu 5,000 –
Chanderkala 8,000 –
Kiran 13,500 –
Anita 14,000 –
Anju – 5,000
Sheiba – 12,000
Manju – 6,000
The following transactions took place in the month of Jan 2017:
Jan. 02 Drew on Babu at two months after date at full settlement for ₹ 4,800. Babu accepted the bill and returned it on 5.1.2017.
Jan. 04 Babu’s bill discounted for ₹ 4,750.
Jan. 08 Chanderkala sent a promissory note for ₹ 8,000 payable three months after date.
Jan. 10 Promissory note established from Chanderkala discounted for ₹ 7,900
Jan. 12 Accepted Sheiba draft for the amount due payable two months after date.
Jan. 22 Anita sent his promissory note payable after two months.
Jan. 23 Anita’s promissory note endorsed in favour of Manju.
Jan. 25 Accepted Anju’s draft payable after three months.
Jan. 29 Kiran sent ₹ 2,000 in cash and a promissory note for the balance payable after three months.
Record the above transactions in the proper subsidiary books.
The transactions are recorded in the books below:
Bills Receivable Book | ||||||||||||
No. | Date of Bill
2017 |
Date Received
2016 |
From whom
of Bill |
Drawer
whom received |
Acceptor | Where | Term
Payable |
Due date
2016 |
L.F. | Amount
₹ |
Cash
Book Folio |
Remarks |
01 | 02 Jan | 05 Jan | Babu | Self | Babu | 2 months | 05 Mar | 4,800 | ||||
Total | 4,800 |
Bills Payable Book | ||||||||||||
No. | Date of Bill
2017 |
To Whom
Given |
Drawer | Payee | Where
payable |
Term | Due date
2017 |
Ledger | Amount
₹ |
Date
paid |
Cash
Book Folio |
Remarks |
01 | 12 Jan | Sheiba | Sheiba | – | 2 months | 15 Mar | 12,000 | |||||
02 | 25 Jan | Anju | Anju | – | 2 months | 28 Apr | 5,000 | |||||
Total | 17,000 |
Cash Book | |||||||||
Dr. | Cr. | ||||||||
Date | Particulars | L.F. | Cash
₹ |
Bank
₹ |
Date | Particulars | L.F. | Cash
₹ |
Bank
₹ |
2017 | 2017 | ||||||||
04 Jan | Bills Receivable | 4,750 | |||||||
10 Jan | Bills Receivable | 7,900 | |||||||
29 Jan | Kiran | 2,000 | 31 Jan | Balance c/d | 2,000 | 12,650 | |||
2,000 | 12,650 | 2,000 | 12,650 | ||||||
Books of Gautam
Journal |
||||||||
Date | Particulars | L.F. | Debit ₹ | Credit₹ | ||||
2017 | ||||||||
05 Jan | Discount Allowed A/c | Dr. | 200 | |||||
To Babu | 200 | |||||||
(Babu’s acceptance received and allowed him
discount ₹ 200) |
||||||||
04 Jan | Discount A/c | Dr. | 50 | |||||
To Bills Receivable A/c | 50 | |||||||
(Babu’s acceptance discounted with a discount
charge of ₹ 50) |
||||||||
08 Jan | Bills Receivable A/c | Dr. | 8,000 | |||||
To Chanderkala | 8,000 | |||||||
(Promissory Note from Chanderkala received) | ||||||||
10 Jan | Discount A/c | Dr. | 100 | |||||
To Bills Receivable A/c | 100 | |||||||
(Chanderkala’s Promissory Note discounted with bank
at discount of ₹ 100) |
||||||||
22 Jan | Bills Receivable A/c | Dr. | 14,000 | |||||
To Anita | 14,000 | |||||||
(Promissory note established from Anita) | ||||||||
23 Jan | Manju | Dr. | 14,000 | |||||
To Bills Receivable A/c | 14,000 | |||||||
(Anita’s Promissory Note endorsed to Manju) | ||||||||
29 Jan | Bills Receivable A/c | Dr. | 11,500 | |||||
To Kiran | 11,500 | |||||||
(Promissory Note from Kiran received) | ||||||||
- On Jan. 01, 2017 Harsh accepted a month bill for ₹ 10,000 drawn on him by Tanu for latter’s benefit. Tanu discounted the bill on same day @ 8% p.a. On the due date Tanu sent a cheque to Harsh for honour the bill. Harsh duly honoured his acceptance. Record the journal entries in the Books of Tanu and Harsh.
The journal entries recorded are shown below:
Books of Tanu
Journal |
|||||||
Date | Particulars | L.F. | Debit ₹ | Credit₹ | |||
2017 | |||||||
01 Jan | Bills Receivable A/c | Dr. | 10,000 | ||||
To Harsh | 10,000 | ||||||
(Harsh’s acceptance received) | |||||||
01 Jan | Bank A/c | Dr. | 9,933 | ||||
Discount A/c | 67 | ||||||
To Bills Receivable A/c | 10,000 | ||||||
(Harsh’s acceptance discounted at 8% p.a.
for one month) |
|||||||
04 Feb | Harsha | Dr. | 10,000 | ||||
To Bank A/c | 10,000 | ||||||
(Harsh’s account settled by paying amount
due to Harsh through cheque) |
|||||||
Books of Harsh
Journal |
||||||||
Date | Particulars | L.F. | Debit ₹ | Credit₹ | ||||
2017 | ||||||||
01 Jan | Tanu | Dr. | 10,000 | |||||
To Bills Payable A/c | 10,000 | |||||||
(Bill drawn by Tanu accepted) | ||||||||
04 Feb | Bank A/c | Dr. | 10,000 | |||||
To Tanu | 10,000 | |||||||
(Cheque received from Tanu) | ||||||||
04 Feb | Bills Payable A/c | Dr. | 10,000 | |||||
To Bank A/c | 10,000 | |||||||
(Bill drawn by Tanu met on due date) | ||||||||
These are some important numericals from Chapter 8 Bill of Exchange.
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