Bill of Exchange – Numerical Questions Solutions

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This page contains solutions to numerical questions for the chapter 8 Bill of Exchange. If you’re looking for solutions for theoretical questions, you can find them at Bill of Exchange
Bill of Exchange – Numerical Questions Solutions
1. On Jan 01, 2015 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 of Rao and prepare of Rao’s account in the books of Reddy.

Books of Rao
Journal Entries
Date
Particulars
L.F
Dr
Cr
2015
Jan 01
Reddy A/c
Dr.
10,000
To Sales A/c
10,000
(Being goods sold to Reddy)
Jan 01
Cash A/c
Dr.
5,000
To Reddy A/c
5,000
(Being cash paid by Reddy)
Jan 01
Bills Receivable A/c
Dr.
5,000
To Reddy A/c
5,000
(Being Bill of Exchange drawn on Reddy for 30 days and duly accepted by him and returned)
Feb 03
Cash A/c
Dr.
5,000
To Bills Receivable A/c
5,000
(Being Bill of Exchange matured and acceptance duly met on maturity date)
2. On Jan 01, 2015, 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 a holiday under the Negotiable Instuments 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 lawer, who duly presented the bill and received the payment. The amount of the bill was handed over by the lawer to Parvati immediately. Record the necessary Journal entries in the books of Parvati and Shankar.
Books of Parvati
Journal Entries
Date
Particulars
L.F
Dr
Cr
2015
Jan 01
Shankar A/c
Dr.
8,000
To Sales A/c
8,000
(Being goods sold to Shankar)
Jan 01
Bills Receivable A/c
Dr.
8,000
To Shankar A/c
8,000
(Being Promissory note received from Shankar for 3 months)
Apr 05
Bank A/c
Dr.
8,000
To Bills Receivable A/c
8,000
(Being Promissory note matured and duly met on maturity date)
Books of Shankar
Journal
Date
Particulars
L.F
Dr
Cr
2015
Jan 01
Purchase A/c
Dr.
8,000
To Parvati A/c
8,000
(Being goods purchased from Parvati)
Jan 01
Parvati A/c
Dr.
8,000
To Bills Payable A/c
8,000
(Being Promissory note provided to Parvati)
Apr 05
Bills Payable A/c
Dr.
8,000
To Bank A/c
8,000
(Being Promissory note matured and duly met on maturity date)
3. Vishal sold goods for ₹ 7,000 to Manju on Jan 05, 2015 and drew upon her a bill of exchange payable after 2 months. Manju accpted 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 accptance.
Jounalise the above transactions in the books of Vishal and Manju.
Working Notes:
Discount from Bank (for 2 months) =
7,000×
12
100
×
2
12
=
140
Cash Deposited by Bank =
7,000 – 140
=
6,860
Books of Vishal
Journal
Date
Particulars
L.F
Dr
Cr
2015
Jan 05
Manju A/c
Dr.
7,000
To Sales A/c
7,000
(Being goods sold to Manju)
Jan 05
Bills Receivable A/c
Dr.
7,000
To Manju A/c
7,000
(Being Bill of exchange duly accepted and returned by Manju)
Jan 05
Bank A/c
Dr.
6,860
Discount A/c
Dr.
140
To Bills Receivable A/c
7,000
(Being Bill of Exchange matured and duly met on maturity date)
Books of Manju
Journal
Date
Particulars
L.F
Dr
Cr
2015
Jan 05
Purchases A/c
Dr.
7,000
To Vishal A/c
7,000
(Being goods purchased from Vishal)
Jan 05
Vishal A/c
Dr.
7,000
To Bills Payable A/c
7,000
(Being Bill of exchange duly accepted and returned to Vishal)
Mar 08
Bills Payable A/
Dr.
7,000
To Bank A/c
7,000
(Being Bill of Exchange matured and duly met on maturity date)
4. On Feb 01, 2015, 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.
Books of Jimmi
Journal
Date
Particulars
L.F
Dr
Cr
2015
Feb 01
John A/c
Dr.
15,000
To Sales A/c
15,000
(Being goods sold to John)
Feb 01
Bank A/c
Dr.
5,000
To John A/c
5,000
(Being cheque received from John for ₹ 5,000)
Feb 01
Bills Receivable A/c
Dr.
10,000
To John A/c
10,000
(Being Bill of Exchange duly accepted and returned by John)
Mar 11
Bills Sent for Collection A/c
Dr.
10,000
To Bills Payable A/c
10,000
(Being Bills sent for collection to bank)
Mar 16
Bank A/c
Dr.
10,000
To Bills Sent for Collection A/c
10,000
(Being bill duly met on maturity date)
Books of John
Journal
Date
Particulars
L.F
Dr
Cr
2015
Feb 01
Purchases A/c
Dr.
15,000
To Jimmi A/c
15,000
(Being goods purchased from John)
Feb 01
Jimmi A/c
Dr.
5,000
To Bank A/c
5,000
(Being cheque paid to Jimmy for ₹ 5,000)
Feb 01
Jimmi A/c
Dr.
10,000
To Bills Payable A/c
10,000
(Being Bill of Exchange duly accepted and returned by John)
Mar 16
Bills Payable A/c
Dr.
10,000
To Bank A/c
10,000
(Being bill duly met on maturity date)
5. 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 months 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. Jurnalise the above transactions in the books of Kartar and Bhagwan. Also prepare ledger accounts in the books of Kartar and Bhagwan.
Working Notes:
Discount from Bank (for 3 months) =
10,000×
6
100
×
3
12
=
150
Cash Deposited by Bank =
10,000 – 150
=
9,850
Books of Kartar
Journal
Date
Particulars
L.F
Dr
Cr
2015
Jan 15
Bhagwan A/c
Dr.
30,000
To Sales A/c
30,000
(Being goods sold to Bhagwan)
Jan 15
Bills Receivable A/c
Dr.
30,000
To Bhagwan A/c
30,000
(Being Bill of exchange duly accepted and returned by Bhagwan)
Jan 15
Ratna A/c
Dr.
10,000
To Bills Receivable Account A/c
10,000
(Being ₹ 10,000 bill from Bhagwan endorsed to Ratna)
Jan 15
Bank A/c
Dr.
9,850
Discount A/c
Dr.
150
To Bills Receivable Account A/c
10,000
(Being ₹ 10,000 bill from Bhagwan discounted with bank)
Feb 18
Cash A/c
Dr.
10,000
To Bills Receivable A/c
10,000
(Being the third bill of ₹ 10,000 accepted by Bhagwan matured and duly met on maturity date)
Books of Bhagwan
Journal
Date
Particulars
L.F
Dr
Cr
2015
Jan 15
Purchases A/c
Dr.
30,000
To Kartar A/c
30,000
(Being goods purchased from Kartar)
Jan 15
Kartar A/c
Dr.
30,000
To Bills Payable A/c
30,000
(Being three bills each of ₹ 10,000 each duly accepted and returned to Kartar)
Feb 18
Bills Payable A/c
Dr.
10,000
To Bank A/c
10,000
(Being first of the three ₹ 10,000 bills matured and paid)
Mar 18
Bills Payable A/c
Dr.
10,000
To Bank A/c
10,000
(Being second of the three ₹ 10,000 bills matured and paid)
Apr 18
Bills Payable A/c
Dr.
10,000
To Bank A/c
10,000
(Being third of the three ₹ 10,000 bills matured paid)
On Jan. 01, 2015 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 Jounalise the above transactions in the books of Arun and Sunil.
If the date of maturity of the bill is a business day then the maturity date would be
Jan 01, 2015 + 20 days + 3 datys of grace
= 24 Jan 2015.
However, if this day falls on a public holiday as described in the Negotiable Instruments Act, 1881, then the maturity date would be the preceding day. Hence it would be 24 Jan, 2015.

Working Notes:
Cash Discount provided to Sunil =
15,000×
6
100
×
2
100
=
300
Cash paid by Sunil =
15,000 – 300
=
14,700
Books of Arun
Journal
Date
Particulars
L.F
Dr
Cr
2015
Jan 01
Sunil A/c
Dr.
30,000
To Sales A/c
30,000
(Being goods sold to Sunil)
Jan 01
Cash A/c
Dr.
14,700
Discount A/c
Dr.
300
To Sunil A/c
15,000
(Being 50% of the payment received from Sunil with 2% discount)
Jan 01
Bills Receivable A/c
Dr.
15,000
To Sunil A/c
15,000
(Being Promissory note received from Sunil)
Jan 24
Cash A/c
Dr.
15,000
To Bills Receivable Account A/c
15,000
(Being the promissory note matured and duly paid by Sunil on the date of maturity)
Books of Sunil
Journal
Date
Particulars
L.F
Dr
Cr
2015
Jan 01
Purchases A/c
Dr.
30,000
To Arun A/c
30,000
(Being goods purchased from Arun)
Jan 01
Arun A/c
Dr.
15,000
To Cash A/c
14,700
To Discount A/c
300
(Being 50% of the payment paid to Arun with 2% discount received)
Jan 01
Arun A/c
Dr.
15,000
To Bills Payable A/c
15,000
(Being promissory note issued to Arun)
Jan 24
Bills Payable A/c
Dr.
15,000
To Cash A/c
15,000
(Being the promissory note matured and duly paid to Sunil on the date of maturity)
7. Darshan sold goods for Rs. 40,000 to Varun on 8.1.2015 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.
  1. When the bill was retained by Darshan till the date of its maturity.
  2. When Darshan immediately discounted the bill @ 6% p.a. with his bank.
  3. When the bill was endorsed immediately by Darshan in favour of his creditor Suresh.
  4. When three days before its maturity, the bill was sent by Darshan to his bank for collection.
Case 1: When the bill was retained by Darshan till the date of its maturity:
Books of Darshan
Journal
Date
Particulars
L.F
Dr
Cr
2015
Jan 08
Varun A/c
Dr.
40,000
To Sales A/c
40,000
(Being goods sold to Varun)
Jan 08
Bills Receivable A/c
Dr.
40,000
To Varun A/c
Dr.
40,000
(Being Bill of Exchange duly accepted and returned by Varun)
Mar 11
Cash A/c
Dr.
40,000
To Bills Receivable A/c
40,000
(Being the bill duly matured and paid on the date of maturity.)
Books of Varun
Journal
Date
Particulars
L.F
Dr
Cr
2015
Jan 08
Purchase A/c
Dr.
40,000
To Varun A/c
40,000
(Being goods purchased from Darshan)
Jan 08
Varun A/c
Dr.
40,000
To Bills Payable A/c
40,000
(Being Bill of Exchange duly accepted and returned to Darshan)
Mar 11
Bills Payable A/c
Dr.
40,000
To Cash A/c
40,000
(Being the Bill of Exchange matured and duly cleared on date of maturity)
Case 2: When Darshan immediately discounted the bill @ 6% p.a. with his bank:
Working Notes:
Discount from Bank (for 2 months) =
40,000×
6
100
×
2
12
=
400
Cash Deposited by Bank =
40,000 – 400
=
39,600
Books of Darshan
Journal
Date
Particulars
L.F
Dr
Cr
2015
Jan 08
Varun A/c
Dr.
40,000
To Sales A/c
40,000
(Being goods sold to Varun)
Jan 08
Bills Receivable A/c
Dr.
40,000
To Varun A/c
40,000
(Being Bill of Exchange duly accepted and returned by Varun)
Jan 08
Bank A/c
Dr.
39,600
Discount A/c
Dr.
400
To Bills Receivable A/c
40,000
(Being the Bill of Exchange discounted from Bank)
Books of Varun
Journal
Date
Particulars
L.F
Dr
Cr
2015
Jan 08
Purchase A/c
Dr.
40,000
To Varun A/c
40,000
(Being goods purchased from Darshan)
Jan 08
Varun A/c
Dr.
40,000
To Bills Payable A/c
40,000
(Being Bill of Exchange duly accepted and returned to Darshan)
Mar 11
Bills Payable A/c
Dr.
40,000
To Bank A/c
40,000
(Being the Bill of Exchange matured and duly cleared on date of maturity)
Case 3: When the bill was endorsed immediately by Darshan in favour of his creditor Suresh:
Books of Darshan
Journal
Date
Particulars
L.F
Dr
Cr
2015
Jan 08
Varun A/c
Dr.
40,000
To Sales A/c
40,000
(Being goods sold to Varun)
Jan 08
Bills Receivable A/c
Dr.
40,000
To Varun A/c
40,000
(Being Bill of Exchange duly accepted and returned by Varun)
Jan 08
Suresh A/c
Dr.
40,000
To Bills Receivable A/c
40,000
(Being the Bill of Exchange endorsed in favour of Suresh)
Books of Varun
Journal
Date
Particulars
L.F
Dr
Cr
2015
Jan 08
Purchase A/c
Dr.
40,000
To Varun A/c
40,000
(Being goods purchased from Darshan)
Jan 08
Varun A/c
Dr.
40,000
To Bills Payable A/c
40,000
(Being Bill of Exchange duly accepted and returned to Darshan)
Mar 11
Bills Payable A/c
Dr.
40,000
To Cash A/c
40,000
(Being the Bill of Exchange matured and duly cleared on date of maturity)
Case 4: When three days before its maturity, the bill was sent by Darshan to his bank for collection:
Books of Darshan
Journal
Date
Particulars
L.F
Dr
Cr
2015
Jan 08
Varun A/c
Dr.
40,000
To Sales A/c
40,000
(Being goods sold to Varun)
Jan 08
Bills Receivable A/c
Dr.
40,000
To Varun A/c
40,000
(Being Bill of Exchange duly accepted and returned by Varun)
Mar 08
Bills Sent for Collection A/c
Dr.
40,000
To Bills Receivable A/c
40,000
(Being the Bill of Exchange sent for collection to bank)
Mar 11
Bank A/c
Dr.
40,000
To Bills Sent for Collection A/c
40,000
(Being the Bill of Exchange matured and duly collected on date of maturity)
Books of Varun
Journal
Date
Particulars
L.F
Dr
Cr
2015
Jan 08
Purchase A/c
Dr.
40,000
To Varun A/c
40,000
(Being goods purchased from Darshan)
Jan 08
Varun A/c
Dr.
40,000
To Bills Payable A/c
40,000
(Being Bill of Exchange duly accepted and returned to Darshan)
Mar 11
Bills Payable A/c
Dr.
40,000
To Bank A/c
40,000
(Being the Bill of Exchange matured and duly cleared on date of maturity)
8. 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
Dec. 21, 2015
1,000
Dec. 26, 2015
1,200
Dec. 28, 2015
2,000
Dec. 31, 2015
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, 2015 was retained by Bansal Traders with them till the date of its maturity. The promissory note drawn on 26.12.2015 was discounted by Bansal Traders from their bank at 12% p.a. The promissory note drawn on Dec. 28, 2015 was endorsed by Bansal Traders in favour of their creditor Dream Soaps in full settlement of a purchase amounting to Rs. 1,900. On 25.1.2016 Bansal Traders sent the promissory note drawn on Dec. 31, 2015 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.
Note: Please note that there is/was a typo in the text book where in the date Dec. 28 is printed as Dec. 18
Working Notes:
Date
Amount
Discount
Calculation
Discount
Discounted
Price
Dec. 21, 2015
1,000
= 1,000×
10
100
100
= 1,000 – 100
= 900
Dec. 26, 2015
1,200
= 1,200×
10
100
120
= 1,200 – 120
= 1,080
Dec. 28, 2015
2,000
= 2,000×
10
100
200
= 2,000 – 200
= 1,800
Dec. 31, 2015
5,000
= 5,000×
10
100
500
= 5,000 – 500
= 4,500
Discount from Bank (for 30 days) =
1,080 ×
12
100
×
1
12
=
11
Cash Deposited by Bank =
= 1,080 – 11
=
1,069
Books of Bansal Traders
Journal
Date
Particulars
L.F
Dr
Cr
2015
Dec 21
Mohan Traders A/c
Dr.
900
To Sales A/c
900
(Being goods worth ₹ 1,000 sold to Mohan Traders at 10% trade discount)
Dec 21
Bills Receivable A/c
Dr.
900
To Mohan Traders A/c
900
(Being promissory note received from Mohan Traders due after 30 days)
Dec 26
Mohan Traders A/c
Dr.
1,080
To Sales A/c
1,080
(Being goods worth ₹ 1,200 sold to Mohan Traders at 10% trade discount)
Dec 26
Bills Receivable A/c
Dr.
1,080
To Mohan Traders A/c
1,080
(Being promissory note received from Mohan Traders due after 30 days)
Dec 26
Bank A/c
Dr.
1,069
Discount A/c
Dr.
11
To Mohan Traders A/c
1,080
(Being promissory note for ₹ 1,080 discounted @12% p.a. from bank)
Dec 28
Mohan Traders A/c
Dr.
1,800
To Sales A/c
1,800
(Being goods worth ₹ 2,000 sold to Mohan Traders at 10% trade discount)
Dec 28
Bills Receivable A/c
Dr.
1,800
To Mohan Traders A/c
1,800
(Being promissory note received from Mohan Traders due after 30 days)
Dec 28
Dream Soaps A/c
Dr.
1,900
To Bills Receivable A/c
1,800
To Discount A/c
100
(Being promissory note worth ₹ 1,800 endorsed to Dream Soaps in full settlement of ₹ 1,900 worth of credit at a discount of ₹ 100)
Dec 31
Mohan Traders A/c
Dr.
4,500
To Sales A/c
4,500
(Being goods worth ₹ 5,000 sold to Mohan Traders at 10% trade discount)
Dec 28
Bills Receivable A/c
Dr.
4,500
To Mohan Traders A/c
4,500
(Being promissory note received from Mohan Traders due after 30 days)
2016
Jan 23
Cash A/c
Dr.
900
To Bills Receivable A/c
900
(Being promissory note for ₹ 900 matured and realized)
Jan 25
Bills Sent for Collection A/c
Dr.
4,500
To Bills Receivable A/c
4,500
(Being promissory note for ₹ 4,500 sent to bank for collection)
Feb 02
Bank A/c
Dr.
4,500
To Bills Sent for Collection A/c
4,500
(Being promissory note for ₹ 4,500 matured and realised)
Books of Bansal Traders
Journal
Date
Particulars
L.F
Dr
Cr
2015
Dec 21
Purchases A/c
Dr.
900
To Bansal Traders A/c
900
(Being goods worth ₹ 1,000 purchased from Mohan Traders at 10% trade discount)
Dec 21
To Bansal Traders A/c
Dr.
900
To Bills Payable A/c
900
(Being promissory note for ₹ 900 issued to Bansal Traders)
Dec 26
Purchases A/c
Dr.
1,080
To Bansal Traders A/c
1,080
(Being goods worth ₹ 1,200 purchased from Mohan Traders at 10% trade discount)
Dec 26
To Bansal Traders A/c
Dr.
1,080
To Bills Payable A/c
1,080
(Being promissory note for ₹ 1,080 issued to Bansal Traders)
Dec 28
Purchases A/c
Dr.
1,800
To Bansal Traders A/c
1,800
(Being goods worth ₹ 2,000 purchased from Mohan Traders at 10% trade discount)
Dec 28
To Bansal Traders A/c
Dr.
1,800
To Bills Payable A/c
1,800
(Being promissory note for ₹ 1,800 issued to Bansal Traders)
Dec 31
Purchases A/c
Dr.
4,500
To Bansal Traders A/c
4,500
(Being goods worth ₹ 5,000 purchased from Mohan Traders at 10% trade discount)
Dec 31
To Bansal Traders A/c
Dr.
4,500
To Bills Payable A/c
4,500
(Being promissory note for ₹ 4,500 issued to Bansal Traders)
2016
Jan 23
Bills Payable A/c
Dr.
900
To Cash A/c
900
(Being promissory note worth ₹ 900 discharged upon maturity, by cash)
Jan 28
Bills Payable A/c
Dr.
1,080
To Bank A/c
1,080
(Being promissory note worth ₹ 1,080 discharged upon maturity, through bank)
Jan 30
Bills Payable A/c
Dr.
1,800
To Cash A/c
1,800
(Being promissory note worth ₹ 1,800 discharged upon maturity, by cash)
Feb 02
Bills Payable A/c
Dr.
4,500
To Bank A/c
4,500
(Being promissory note worth ₹ 4,500 discharged upon maturity, through bank)
9. Narayanan purchased goods for Rs.25,000 from Ravinderan on Feb. 01, 2015. Ravinderan 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 Ravinderan and Narayanan in following cases:
  1. When the bill was retained by Ravinderan with him till the date of its maturity.
  2. When the bill was discounted by Ravinderan immediately with his bank @ 6% p.a.
  3. When the bill was endorsed to his creditor Ganeshan.
  4. When the bill was sent by Ravinderan to his bank for collection a few days before it maturity.

Case 1:When the bill was retained by Ravinderan with him till the date of its maturity:
Books of Ravinder
Journal
Date
Particulars
L.F
Dr
Cr
2015
Feb 01
Narayanan A/c
Dr.
25,000
To Sales A/c
25,000
(Being goods sold to Narayanan)
Feb 01
Bills Receivable A/c
Dr.
25,000
To Narayanan A/c
25,000
(Being Bill of Exchange drawn upon Narayanan duly accepted by him and returned)
Mar 06
Narayanan A/c
Dr.
25,000
To Bills Receivable A/c
25,000
(Being Bill of Exchange dishounoured by Narayanan and liability of the debtor is restored)
Books of Narayanan
Journal
Date
Particulars
L.F
Dr
Cr
2015
Feb 01
Purchases A/c
Dr.
25,000
To Ravinder A/c
25,000
(Being goods purchased from Narayanan)
Feb 01
Ravinder A/c
Dr.
25,000
To Bills Payable A/c
25,000
(Being Bill of Exchange duly accepted and returned to Ravinder)
Mar 06
Bills Payable A/c
Dr.
25,000
To Ravinder A/c
25,000
(Being Bill of Exchange dishounoured and liability to the creditor is restored)
Case 2: When the bill was discounted by Ravinderan immediately with his bank @ 6% p.a:
Working Notes:
Discount from Bank (for 30 days) =
25,000×
6
100
×
30
365
=
123
Cash Deposited by Bank =
25,000 – 123
=
24,877
Books of Ravinder
Journal
Date
Particulars
L.F
Dr
Cr
2015
Feb 01
Narayanan A/c
Dr.
25,000
To Sales A/c
25,000
(Being goods sold to Narayanan)
Feb 01
Bills Receivable A/c
Dr.
25,000
To Narayanan A/c
25,000
(Being Bill of Exchange drawn upon Narayanan duly accepted by him and returned)
Feb 01
Bank A/c
Dr.
24,877
Discount A/c
Dr.
123
To Bills Receivable A/c
25,000
(Being Bill of Exchange discounted from bank @6% p.a. for 30 days)
Mar 06
Narayanan A/c
Dr.
25,000
To Bank A/c
25,000
(Being Bill of Exchange dishounoured by Narayanan and liability of the debtor is restored)
Books of Narayanan
Journal
Date
Particulars
L.F
Dr
Cr
2015
Feb 01
Purchases A/c
Dr.
25,000
To Ravinder A/c
25,000
(Being goods purchased from Narayanan)
Feb 01
Ravinder A/c
Dr.
25,000
To Bills Payable A/c
25,000
(Being Bill of Exchange duly accepted and returned to Ravinder)
Mar 06
Bills Payable A/c
Dr.
25,000
To Ravinder A/c
25,000
(Being Bill of Exchange dishounoured and liability to the creditor is restored)
Case 3: When the bill was endorsed to his creditor Ganeshan:
Books of Ravinder
Journal
Date
Particulars
L.F
Dr
Cr
2015
Feb 01
Narayanan A/c
Dr.
25,000
To Sales A/c
25,000
(Being goods sold to Narayanan)
Feb 01
Bills Receivable A/c
Dr.
25,000
To Narayanan A/c
25,000
(Being Bill of Exchange drawn upon Narayanan duly accepted by him and returned)
Feb 01
Ganesan A/c
Dr.
25,000
To Bills Receivable A/c
25,000
(Being Bill of Exchange endorsed in favour of Ganesan)
Mar 06
Narayanan A/c
Dr.
25,000
To Ganesan A/c
25,000
(Being Bill of Exchange dishounoured by Narayanan and liability of the debtor and creditor are restored)
Books of Narayanan
Journal
Date
Particulars
L.F
Dr
Cr
2015
Feb 01
Purchases A/c
Dr.
25,000
To Ravinder A/c
25,000
(Being goods purchased from Narayanan)
Feb 01
Ravinder A/c
Dr.
25,000
To Bills Payable A/c
25,000
(Being Bill of Exchange duly accepted and returned to Ravinder)
Mar 06
Bills Payable A/c
Dr.
25,000
To Ravinder A/c
25,000
(Being Bill of Exchange dishounoured and liability to the creditor is restored)
Case 4: When the bill was sent by Ravinderan to his bank for collection a few days before it maturity:
Books of Ravinder
Journal
Date
Particulars
L.F
Dr
Cr
2015
Feb 01
Narayanan A/c
Dr.
25,000
To Sales A/c
25,000
(Being goods sold to Narayanan)
Feb 01
Bills Receivable A/c
Dr.
25,000
To Narayanan A/c
25,000
(Being Bill of Exchange drawn upon Narayanan duly accepted by him and returned)
Mar 01
Bills Sent for Collection A/c
Dr.
25,000
To Bills Receivable A/c
25,000
(Being Bill of Exchange sent to Bank for Collection)
Mar 06
Narayanan A/c
Dr.
25,000
To Ganesan A/c
25,000
(Being Bill of Exchange dishounoured by Narayanan and liability of the debtor and creditor are restored)
Books of Narayanan
Journal
Date
Particulars
L.F
Dr
Cr
2015
Feb 01
Purchases A/c
Dr.
25,000
To Ravinder A/c
25,000
(Being goods purchased from Narayanan)
Feb 01
Ravinder A/c
Dr.
25,000
To Bills Payable A/c
25,000
(Being Bill of Exchange duly accepted and returned to Ravinder)
Mar 06
Bills Payable A/c
Dr.
25,000
To Ravinder A/c
25,000
(Being Bill of Exchange dishounoured and liability to the creditor is restored)
10. Ravi sold goods for Rs.40,000 to Sudershan on Feb 13, 2015. He drew four bills of exchange upon Sudershan. The first bill was for Rs.5,000 payable after one month. The second bill was for Rs.10,000 payable after 40 days; the third bill was for Rs.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 Rs.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.
Working Notes:
Discount with Bank (for one month) =
5,000×
6
100
×
1
12
=
25
Cash Deposited by Bank =
5,000 – 25
=
4,975
Interest on dihounoured bill worth of ₹ 13,000 =
13,000×
12
100
×
19
365
=
81
Interest on dihounoured bill worth of ₹ 5,000 =
5,000×
12
100
×
1
12
=
50
Interest on dihounoured bill worth of ₹ 10,000 =
10,000×
12
100
×
40
365
=
132
Interest on dihounoured bill worth of ₹ 12,000 =
10,000×
12
100
×
3
12
=
360
Books of Ravi
Journal
Date
Particulars
L.F
Dr
Cr
2015
Feb 13
Sudarshan A/c
Dr.
40,000
To Sales A/c
40,000
(Being goods sold to Ravi on credit)
Feb 13
Bills Receivable A/c
Dr.
40,000
To Ravi A/c
40,000
(Being four Bills of exchange worth each of ₹ 5,000, ₹ 10,000, ₹ 12,000 and ₹ 13,000 draw upon Ravi duly accepted by him and returned.)
Feb 13
Bank A/c
Dr.
4,975
Discount A/c
Dr.
25
To Bills Receivable A/c
5,000
(Being Bill of Exchange worth of ₹ 5,000 discounted with the bank @6% p.a. for one month)
Feb 13
Mustaq A/c
Dr.
10,200
To Bills Receivable A/c
10,000
To Discount Received A/c
200
(Being Bill of Exchange worth of ₹ 10,200 endorsed in favour of Mustaq to settle an amount of ₹ 10,200)
Mar 02
Bills Sent for Collection A/c
Dr.
13,000
To Bills Receivable A/c
13,000
(Being Bill of Exchange for ₹ 13,000, due for maturity in 5 days, sent to bank for collection)
Mar 07
Sudarsan A/c
Dr.
13,000
To Bills Sent for Collection A/c
13,000
(Being Bill of Exchange worth of ₹ 13,000 dishonoured)
Mar 07
Sudarsan A/c
Dr.
81
To Interest A/c
81
(Being interest on dishonoured Bill of Exchange worth of ₹ 13,000 @12% p.a. for 19 days)
Mar 10
Cash A/c
Dr.
13,081
To Sudarshan A/c
13,081
(Being cash paid by Sudarshan in lieu of the dishonoured Bill of Exchange worth of ₹ 13,000 + interest)
Mar 16
Sudarsan A/c
Dr.
5,000
To Bank A/c
5,000
(Being Bill of Exchange worth of ₹ 5,000 dishonoured)
Mar 16
Sudarsan A/c
Dr.
50
To Interest A/c
50
(Being interest on dishonoured Bill of Exchange worth of ₹ 5,000 @12% p.a. for one month)
Mar 19
Cash A/c
Dr.
5,050
To Sudarshan A/c
5,050
(Being cash paid by Sudarshan in lieu of the dishonoured Bill of Exchange worth of ₹ 5,000 + interest)
Mar 28
Sudarsan A/c
Dr.
10,000
Discount Received A/c
Dr.
200
To Mushtaq A/c
10,200
(Being Bill of Exchange worth of ₹ 10,000 dishonoured, the liability of the debtor and creditor are restored)
Mar 28
Sudarsan A/c
Dr.
132
To Interest A/c
132
(Being interest on dishonoured Bill of Exchange worth of ₹ 10,000 @12% p.a. for 40 days)
Apr 01
Cash A/c
Dr.
10,132
To Sudarshan A/c
10,132
(Being cash paid by Sudarshan in lieu of the dishonoured Bill of Exchange worth of ₹ 10,000 + interest)
May 16
Sudarsan A/c
Dr.
12,000
To Bills Receivable A/c
12,000
(Being Bill of Exchange worth of ₹ 12,000 dishonoured, the liability of the debtor is restored)
May 16
Sudarsan A/c
Dr.
360
To Interest A/c
360
(Being interest on dishonoured Bill of Exchange worth of ₹ 12,000 @12% p.a. for 3 months)
Apr 01
Cash A/c
Dr.
12,360
To Sudarshan A/c
12,360
(Being cash paid by Sudarshan in lieu of the dishonoured Bill of Exchange worth of ₹ 12,000 + interest)
Books of Ravi
Journal
Date
Particulars
L.F
Dr
Cr
2015
Feb 13
Purchases A/c
Dr.
40,000
To Ravi A/c
40,000
(Being goods purchased from Ravi on credit)
Feb 13
Ravi A/c
Dr.
40,000
To Bills Payable A/c
40,000
(Being four bills worth of ₹ 5000 payable after one month, ₹ 10,000 payable after 40 days, ₹ 12,000 payable after 3 months and ₹ 13,000 payable after 19 days are accepted and returned to Ravi)
Mar 07
Bills Receivable A/c
Dr.
13,000
To Ravi A/c
13,000
(Being bill worth of ₹ 13,000 dishonoured and the liability to the creditor is restored)
Mar 07
Interest A/c
Dr.
81
To Ravi A/c
81
(Being interest to be paid for the dishounoured bill worth of ₹ 13,000)
Mar 10
Ravi A/c
Dr.
13,081
To Cash A/c
13,081
(Being paid to Ravi to repay the dishonoured bill worth of ₹ 13,000 + interest)
Mar 16
Bills Receivable A/c
Dr.
5,000
To Ravi A/c
5,000
(Being bill worth of ₹ 5,000 dishonoured and the liability to the creditor is restored)
Mar 16
Interest A/c
Dr.
50
To Ravi A/c
50
(Being interest to be paid for the dishounoured bill worth of ₹ 5,000)
Mar 19
Ravi A/c
Dr.
5,050
To Cash A/c
5,050
(Being paid to Ravi to repay the dishonoured bill worth of ₹ 5,000 + interest)
Mar 28
Bills Receivable A/c
Dr.
10,000
To Ravi A/c
10,000
(Being bill worth of ₹ 10,000 dishonoured and the liability to the creditor is restored)
Mar 28
Interest A/c
Dr.
132
To Ravi A/c
132
(Being interest to be paid for the dishounoured bill worth of ₹ 10,000)
Apr 01
Ravi A/c
Dr.
10,132
To Cash A/c
10,132
(Being paid to Ravi to repay the dishonoured bill worth of ₹ 10,000 + interest)
May 16
Bills Receivable A/c
Dr.
12,000
To Ravi A/c
12,000
(Being bill worth of ₹ 12,000 dishonoured and the liability to the creditor is restored)
May 16
Interest A/c
Dr.
360
To Ravi A/c
360
(Being interest to be paid for the dishounoured bill worth of ₹ 13,000)
May 19
Ravi A/c
Dr.
12,360
To Cash A/c
12,360
(Being paid to Ravi to repay the dishonoured bill worth of ₹ 12,000 + interest)
Books of Mushtaq
Journal
Date
Particulars
L.F
Dr
Cr
2015
Feb 13
Bills Receivable A/c
Dr.
10,000
Discount Allowed A/c
Dr.
200
To Ravi A/c
10,200
(Being Bill of Exchange received from Ravi and discount provided)
Feb 13
Ravi A/c
Dr.
10,200
To Bills Receivable A/c
10,000
To Discount Allowed A/c
200
(Being Bill of Exchange dishonoured and the liability of the debtor is restored)
Books of Bank
Journal
Date
Particulars
L.F
Dr
Cr
2015
Mar 02
Bills Receivable A/c
Dr.
13,000
To Bills Sent for Collection A/c
13,000
(Being Bill of Exchange received from Ravi for collection)
Mar 07
Bills Sent for Collection A/c
Dr.
13,000
To Bills Receivable A/c
13,000
(Being Bill of Exchange dishonoured)
11. On Jan 01, 2015 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.

Working Notes:
Rebate on the bill (for 1 months) =
20,000×
12
100
×
1
12
=
200
Cash Paid by Neha (After rebate) =
20,000 – 200
=
19,800
Books of Neha
Journal
Date
Particulars
L.F
Dr
Cr
2015
Jan 01
Muskan A/c
Dr.
20,000
To Sales A/c
20,000
(Being goods sold to Muskan)
Jan 01
Bills Receivable A/c
Dr.
20,000
To Muskan A/c
20,000
(Being Bill of Exchange drawn on Muskan, duly accepted and returned by Muskan)
Feb 04
Cash A/c
Dr.
19,800
Discount Allowed A/c
Dr.
200
To Bills Receivable A/c
20,000
(Being cash payment received from Muskan against the bill at a rebate of 12% p.a. and the bill is retired upon mutual acceptance)
Books of Muskan
Journal
Date
Particulars
L.F
Dr
Cr
2015
Jan 01
Purchases A/c
Dr.
20,000
To Neha A/c
20,000
(Being goods purchased from Neha)
Jan 01
Neha A/c
Dr.
20,000
To Bills Payable A/c
20,000
(Being Bill of Exchange for ₹ 20,000 duly accepted and returned to Neha)
Feb 04
Bills Payable A/c
Dr.
20,000
To Cash A/c
19,800
To Discount Received A/c
200
(Being cash paid to Neha against the bill at a rebate of 12% p.a. and the bill is retired upon mutual acceptance)
12. On Jan 15, 2015 Raghu sold goods worth ₹ 35,000 to Devendra and drew upto 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 dishonored by Devendra and the bank paid Rs.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.
Working Notes:
Discount from Bank (for 3 months) =
20,000×
6
100
×
3
12
=
300
Cash Deposited by Bank =
20,000 – 300
=
19,700
Books of Raghu
Journal
Date
Particulars
L.F
Dr
Cr
2015
Jan 15
Devendra A/c
Dr.
35,000
To Sales A/c
35,000
(Being goods sold to Devendra)
Jan 15
Bills Receivable A/c
Dr.
35,000
To Devendra A/c
35,000
(Being Bills of Exchange worth of ₹ 5,000 for one month, ₹ 20,000 for three months, ₹ 10,000 for four months, duly accepted and returned by Devendra)
Jan 15
Dewan A/c
Dr.
5,200
To Bills Receivable A/c
5,000
To Discount Received A/c
200
(Being Bill of Exchange worth of ₹ 5,000 endorsed to the creditor Dewan for a discount of ₹ 200)
Jan 15
Bank A/c
Dr.
19,700
Discount Allowed A/c
Dr.
300
To Bills Receivable A/c
20,000
(Being Bill of Exchange worth of ₹ 20,000 discounted from bank @ 6% p.a. for 3 months)
Apr 18
Devendra A/c
Dr.
20,030
To Bank A/c
20,030
(Being Bill of Exchange worth of ₹ 20,000 dishounoured by Devendra and the bank paid ₹ 30 as noting charges)
May 14
Bills Sent for Collection A/c
Dr.
15,000
To Bills Receivable A/c
15,000
(Being Bill of Exchange worth of ₹ 15,000 sent for collection to Bank)
May 18
Devendra A/c
Dr.
15,200
To Bills Sent for Collection A/c
15,000
To Bank A/c
200
(Being Bill of Exchange worth of ₹ 15,000 dishounoured by Devendra and the bank paid ₹ 200 as noting charges)
May 23
Devendra A/c
Dr.
1,000
To Interest A/c
1,000
(Being interest agreed to be paid by Devendra after dishouring of the bills)
May 23
Cash A/c
Dr.
31,230
To Devendra A/c
31,230
(Being cash paid by Devendra in full settlement of the account)
Books of Devendra
Journal
Date
Particulars
L.F
Dr
Cr
2015
Jan 15
Purchases A/c
Dr.
35,000
To Raghu A/c
35,000
(Being purchased from Raghu)
Jan 15
Raghu A/c
Dr.
35,000
To Bills Payable A/c
35,000
(Being bills worth of ₹ 5,000 for one month, ₹ 20,000 for three months and ₹ 10,000 for one month duly accepted and returned to Raghu)
Feb 18
Bills Payable A/c
Dr.
5,000
To Cash A/c
5,000
(Being bill worth of ₹ 5,000 matured and discharged on maturity date)
Apr 18
Bills Payable A/c
Dr.
20,000
Noting Charges A/c
Dr.
30
To Raghu A/c
20,030
(Being bill worth of ₹ 20,000 dishonoured and noting charges ₹ 30)
May 18
Bills Payable A/c
Dr.
10,000
Noting Charges A/c
Dr.
200
To Raghu A/c
10,200
(Being bill worth of ₹ 10,000 dishonoured and noting charges ₹ 200)
May 23
Interest A/c
Dr.
1,000
To Raghu A/c
1,000
(Being interest promised to pay to Raghu due to dishonouring of the bills)
May 23
Cash A/c
Dr.
31,230
To Bank Loan A/c
31,230
(Being loan taken from bank to settle the bills owed to Raghu)
May 23
Raghu A/c
Dr.
31,230
To Cash A/c
31,230
(Being the bills settled through cash payment)
Books of Dewan
Journal
Date
Particulars
L.F
Dr
Cr
2015
Jan 15
Bills Receivable A/c
Dr.
5,000
Discount Allowed A/c
Dr.
200
To Raghu A/c
5,200
(Being credit worth of ₹ 5,200 is discounted for ₹ 200 to Raghu)
Feb 18
Cash A/c
Dr.
5,000
To Bills Receivable A/c
5,000
(Being bill worth of ₹ 5,000 matured and realized)
13. Vimal purchased goods ₹ 25,000 from Kamal on Jan 15, 2015 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
  1. The bill was retained by Kamal till the date of its maturity.
  2. The bill was immediately discounted by Kamal with his bank @ 6% p.a.
  3. The bill was endorsed by Kamal in favour of his creditor Sharad.
  4. Five days before its maturity the bill was sent by Kamal to his bank for collection.
Case 1: The bill was retained by Kamal till the date of its maturity:
Books of Kamal
Journal Entries
Date
Particulars
L.F
Dr
Cr
2015
Jan 15
Vimal A/c
Dr.
25,000
To Sales A/c
25,000
(Being goods sold to Vimal)
Jan 15
Bills Receivable A/c
Dr.
25,000
To Vimal A/c
25,000
(Being Bill of Exchange drawn on Vimal and duly accepted and returned by him)
Mar 18
Vimal A/c
Dr.
25,000
To Bill of Exchange A/c
25,000
(Being Bill of Exchange dishonored by Vimal and the liability of the acceptor is restored)
Books of Vimal
Journal Entries
Date
Particulars
L.F
Dr
Cr
2015
Jan 15
Purchases A/c
Dr.
25,000
To Kamal A/c
25,000
(Being goods purchased from Kamal)
Jan 15
Kamal A/c
Dr.
25,000
To Bills Payable A/c
25,000
(Being bill worth of ₹ 25,000 duly accepted and returned to Kamal)
Mar 18
Bills Payable A/c
Dr.
25,000
To Kamal A/c
25,000
(Being bill dishonoured and the liability to the creditor is restored)
Case 2: The bill was immediately discounted by Kamal with his bank @ 6% p.a:
Working Notes:
Discount from Bank (for 2 months) =
25,000×
6
100
×
2
12
=
250
Cash Deposited by Bank =
25,000 – 250
=
24,750
Books of Kamal
Journal Entries
Date
Particulars
L.F
Dr
Cr
2015
Jan 15
Vimal A/c
Dr.
25,000
To Sales A/c
25,000
(Being goods sold to Vimal)
Jan 15
Bills Receivable A/c
Dr.
25,000
To Vimal A/c
25,000
(Being Bill of Exchange drawn on Vimal and duly accepted and returned by him)
Jan 15
Bank A/c
Dr.
24,750
Bills Discounting Charges A/c
Dr.
250
To Bills Receivable A/c
25,000
(Being Bill of Exchange discounted by bank @6% p.a. for 2 months)
Mar 18
Vimal A/c
Dr.
25,000
To Bank A/c
25,000
(Being Bill of Exchange dishonored by Vimal and the liability of the acceptor is restored)
Books of Vimal
Journal Entries
Date
Particulars
L.F
Dr
Cr
2015
Jan 15
Purchases A/c
Dr.
25,000
To Kamal A/c
25,000
(Being goods purchased from Kamal)
Jan 15
Kamal A/c
Dr.
25,000
To Bills Payable A/c
25,000
(Being bill worth of ₹ 25,000 duly accepted and returned to Kamal)
Mar 18
Bills Payable A/c
Dr.
25,000
To Kamal A/c
25,000
(Being bill dishonoured and the liability to the creditor is restored)
Case 3: The bill was endorsed by Kamal in favour of his creditor Sharad:
Working Notes:
Books of Kamal
Journal Entries
Date
Particulars
L.F
Dr
Cr
2015
Jan 15
Vimal A/c
Dr.
25,000
To Sales A/c
25,000
(Being goods sold to Vimal)
Jan 15
Bills Receivable A/c
Dr.
25,000
To Vimal A/c
25,000
(Being Bill of Exchange drawn on Vimal and duly accepted and returned by him)
Jan 15
Sharad A/c
Dr.
25,000
To Bils Receivable A/c
25,000
(Being Bill of Exchange endorsed in favour of Sharad)
Mar 18
Vimal A/c
Dr.
25,000
To Sharad A/c
25,000
(Being Bill of Exchange dishonored by Vimal and the liability of the acceptor is restored)
Books of Vimal
Journal Entries
Date
Particulars
L.F
Dr
Cr
2015
Jan 15
Purchases A/c
Dr.
25,000
To Kamal A/c
25,000
(Being goods purchased from Kamal)
Jan 15
Kamal A/c
Dr.
25,000
To Bills Payable A/c
25,000
(Being bill worth of ₹ 25,000 duly accepted and returned to Kamal)
Mar 18
Bills Payable A/c
Dr.
25,000
To Kamal A/c
25,000
(Being bill dishonoured and the liability to the creditor is restored)
Case 4: Five days before its maturity the bill was sent by Kamal to his bank for collection:
Working Notes:
Books of Kamal
Journal Entries
Date
Particulars
L.F
Dr
Cr
2015
Jan 15
Vimal A/c
Dr.
25,000
To Sales A/c
25,000
(Being goods sold to Vimal)
Jan 15
Bills Receivable A/c
Dr.
25,000
To Vimal A/c
25,000
(Being Bill of Exchange drawn on Vimal and duly accepted and returned by him)
Jan 15
Bills Sent for Collection A/c
Dr.
25,000
To Bils Receivable A/c
25,000
(Being bill sent for collection to bank)
Mar 18
Vimal A/c
Dr.
25,000
To Bills Sent for Collection A/c
25,000
(Being Bill of Exchange dishonored by Vimal and the liability of the acceptor is restored)
Books of Vimal
Journal Entries
Date
Particulars
L.F
Dr
Cr
2015
Jan 15
Purchases A/c
Dr.
25,000
To Kamal A/c
25,000
(Being goods purchased from Kamal)
Jan 15
Kamal A/c
Dr.
25,000
To Bills Payable A/c
25,000
(Being bill worth of ₹ 25,000 duly accepted and returned to Kamal)
Mar 18
Bills Payable A/c
Dr.
25,000
To Kamal A/c
25,000
(Being bill dishonoured and the liability to the creditor is restored)
Abdulla sold goods to Tahir on Jan 17, 2015 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 Rs.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.

Books of Abdulla
Journal Entries
Date
Particulars
L.F
Dr
Cr
2015
Jan 17
Tahir A/c
Dr.
18,000
To Sales A/c
18,000
(Being goods sold to Tahir)
Jan 17
Bills Receivable A/c
Dr.
18,000
To Tahir A/c
18,000
(Being Bill of Exchange drawn on Tahir and duly accepted and returned by him)
Mar 06
Tahir A/c
Dr.
18,040
To Bills Receivable A/c
18,000
To Cash A/c
40
(Being Bill of Exchange dishonoured by Tahir and ₹ 40 noting changes are charged to him)
Mar 06
Tahir A/c
Dr.
660
To Interest A/c
660
(Being interest charged to Tahir on account of his dishonouring the bill)
Mar 06
Cash A/c
Dr.
18,700
To Tahir A/c
18,700
(Being the liability settled by Tahir by paying cash)
Books of Tahir
Journal Entries
Date
Particulars
L.F
Dr
Cr
2015
Jan 17
Purchases A/c
Dr.
18,000
To Abdulla A/c
18,000
(Being goods purchased from Abdulla)
Jan 17
Abdulla A/c
Dr.
18,000
To Bills Payable A/c
18,000
(Being Bill of Exchange duly accepted and returned to Abdulla)
Mar 06
Bills Payable A/c
Dr.
18,000
Noting Charges A/c
Dr.
40
To Abdulla A/c
18,040
(Being Bill of Exchange dishonoured and subjected noting charges of ₹ 40)
Mar 06
Interest A/c
Dr.
660
To Abdulla A/c
660
(Being interest due to Abdulla on account of bill dishonoured)
Mar 11
Abdulla A/c
Dr.
18,700
To Cash A/c
18,700
(Being the liability settled through cash)
15. Asha sold goods worth ₹ 19,000 to Nisha on March 02, 2015. ₹ 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 Rs.30 as noting charges.
Record the necessary journal entries in the books of Asha and Nisha.
Note: The bank discount rate is not provided in the question. So, it is assumed that the bill is discounted @12% p.a.
Working Notes:
Discount from Bank (for 3 months) =
15,000×
12
100
×
3
12
=
450
Cash Deposited by Bank =
15,000 – 450
=
14,550
Books of Asha
Journal Entries
Date
Particulars
L.F
Dr
Cr
2015
Mar 02
Nisha A/c
Dr.
19,000
To Sales A/c
19,000
(Being goods sold to Nisha)
Mar 02
Cash A/c
Dr.
4,000
To Bills Receivable A/c
Dr.
15,000
To Nisha A/c
19,000
(Being cash paid by Nisha to Paritiall clear the debt and for the rest of the amount bill drawn and dule accepted and returned by Nisha)
Mar 02
Bank A/c
Dr.
14,550
Discount Charges A/c
Dr.
450
To Bills Receivable A/c
15,000
(Being the bill discounted with the back @12% p.a. for 3 months)
Jun 05
Nisha A/c
Dr.
15,030
To Bank A/c
15,030
(Being the bill dishonoured by Nish and the noting charges of ₹ 30 were paid by the bank)
Books of Nisha
Journal Entries
Date
Particulars
L.F
Dr
Cr
2015
Mar 02
Purchase A/c
Dr.
19,000
To Asha A/c
19,000
(Being goods purchased from Asha)
Mar 02
Asha A/c
Dr.
19,000
To Cash A/c
4,000
To Bills Payable A/c
15,000
(Being the liability is cleared partially by paying ₹ 4,000 in cash and the bill is accepted and returned for the rest of the amount)
Jun 02
Bills Payable A/c
Dr.
15,000
Noting Charges A/c
Dr.
30
To Asha A/c
15,030
(Being the bill dishonoured and noting charges ₹ 30 were paid)
16. On Feb. 02, 2015, 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 ₹ 50 noting charges. On the same date Gupta informed Sharma about the dishonour of the bill. Sharma settled his debt to Gupta by cheque for Rs.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.
Books of Sharma
Journal Entries
Date
Particulars
L.F
Dr
Cr
2015
Feb 02
Verma A/c
Dr.
17,500
To Sales A/c
17,500
(Being goods sold to Verma)
Feb 02
Cash A/c
Dr.
2,500
Bills Receivable A/c
Dr.
15,000
To Verma A/c
17,500
(Being cash ₹ 2,500 paid by Verma and bill is drawn for the rest of the amount note is provided by Verma)
Feb 02
Gupta A/c
Dr.
15,400
To Bills Receivable A/c
15,000
To Discount Received A/c
400
(Being promissory note for ₹ 15,000 is endorsed in favour of Gupta, to settle a liability of ₹ 15,400, for a discount of ₹ 400)
Apr 06
Verma A/c
Dr.
15,050
Discount Received A/c
Dr.
400
To Gupta A/c
15,450
(Being promissory note dishonoured on maturity date and noting charges of ₹ 50 are applied. The liability to the creditor and from the debtor are restored.)
Apr 06
Interest A/c
Dr.
50
To Gupta A/c
50
(Being interest credited to Gupta’s account due to the note being dishonoured on the maturity date.)
Apr 06
Gupta A/c
Dr.
15,500
To Bank A/c
15,500
(Being Sharma’s liability settled by paying through cheque)
Apr 06
Bank A/c
Dr.
15,050
To Verma A/c
15,050
(Being Verma settled the account through cheque)
Books of Verma
Journal Entries
Date
Particulars
L.F
Dr
Cr
2015
Feb 02
Purchases A/c
Dr.
17,500
To Sharma A/c
17,500
(Being goods purchased from Verma)
Feb 02
Sharma A/c
Dr.
17,500
To Cash A/c
2,500
To Bills Payabl3 A/c
15,000
(Being cash paid to partially pay for the goods and promissory note is provided for the rest of the amount)
Apr 06
Bills Payable A/c
Dr.
15,000
Noting Charges A/c
Dr.
50
To Sharma A/c
15,050
(Being promissory note dishonoured and the liability is restored)
Apr 06
Sharma A/c
Dr.
15,050
To Bank A/c
15,050
(Being payment is made through cheque to discharge the liability)
Books of Verma
Journal Entries
Date
Particulars
L.F
Dr
Cr
2015
Feb 02
Bills Receivable A/c
Dr.
15,000
Discount Allowed A/c
Dr.
400
To Sharma A/c
15,400
(Being promissory note for ₹ 15,000 endorsed by Sharma to settle the debt of ₹ 15,400, with ₹ 400 discount allowed)
Apr 06
Sharma A/c
Dr.
15,450
To Noting Charges A/c
50
To Discount Allowed A/c
400
To Bills Receivable A/c
15,000
(Being promissory note dishonoured and noting charges ₹ 50 paid)
Apr 06
Sharma A/c
Dr.
50
To Interest A/c
50
(Being interest charged to Sharma due to the dishonouring of the promissory note)
Apr 06
Bank A/c
Dr.
15,500
To Sharma A/c
15,500
(Being the liability is settled through cheque)
17. Lilly sold goods to Methew on 1.3.2015 for ₹ 12,000 and drew upon Methew 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 Methew and Lilly paid ₹ 45 as noting charges. Methew settled the claim of Lilly five days after the disonour of the bill by a cheque, whch includes interest @ 12% for the term of the bill.
Journalise the above transactions in the books of Lilly and Methew and prepare Mathew’s account in the books of Lilly and Lilly’s account in the books of Mathew.

Working Notes:
The date of maturity of the bill should be Mar 1, 2015 + 2 months + 3 days of grace = May 4, 2015.
As May 4, 2015 is a public holiday the maturity date would be the day preceding this day i.e. May 3, 2015.
Discount from Bank (for 2 months) =
12,000×
9
100
×
2
12
=
180
Cash Deposited by Bank =
12,000 – 180
=
11,820
Interest paid by Mathew due to dishonour of the bill (for 2 months) =
12,000×
12
100
×
2
12
=
240
Books of Lily
Journal Entries
Date
Particulars
L.F
Dr
Cr
2015
Mar 01
Mathew A/c
Dr.
12,000
To Sales A/c
12,000
(Being goods sold to Mathew)
Mar 01
Bills Receivable A/c
Dr.
12,000
To Mathew A/c
12,000
(Being Bill of Exchange was drawn on Mathew and accepted and returned by him)
Mar 01
Bank A/c
Dr.
11,820
Discount Charges A/c
Dr.
180
To Bills Receivable A/c
12,000
(Being the bill discounted with the bank)
May 03
Mathew A/c
Dr.
12,045
To Bank A/c
12,045
(Being the bill dishonoured by Mathew and ₹ 45 paid as noting charges)
May 08
Mathew A/c
Dr.
240
To Interest A/c
240
(Being interest paid by Mathew on account of dishonouring of the bill)
May 08
Bank A/c
Dr.
12,285
To Mathew A/c
12,285
(Being the liability is settled by Mathew by paying through cheque)
Books of Mathew
Journal Entries
Date
Particulars
L.F
Dr
Cr
2015
Mar 01
Purchases A/c
Dr.
12,000
To Lilly A/c
12,000
(Being goods purchased from Lilly)
Mar 01
Lilly A/c
Dr.
12,000
To Bills Payable A/c
12,000
(Being bill of exchange accepted and returned to Lilly)
May 03
Bills Payable A/c
Dr.
12,000
Noting Charges A/c
Dr.
45
To Mathew A/c
12,045
(Being the bill dishonoured and ₹ 45 noting charges are incurred and hence the liability to the creditor is restored)
May 08
Interest A/c
Dr.
12,000
To Mathew A/c
240
(Being the interest charged to Lilly on account of dishonouring of the bill)
May 08
Mathew A/c
Dr.
12,285
To Bank A/c
12,285
(Being the liability settled by paying through cheque)
18. Kapil purchased goods for ₹ 21,000 from Gaurav on 1.2.2015 and accepted a bill of exchange drawn by Gaurav for the same amount. The bill was payable after one month. On 25.2.2015 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.
Books of Gaurav
Journal Entries
Date
Particulars
L.F
Dr
Cr
2015
Feb 01
Kapil A/c
Dr.
21,000
To Sales A/c
21,000
(Being goods sold to Kapil)
Feb 01
Bills Receivable A/c
Dr.
21,000
To Kapil A/c
21,000
(Being bill of exchange duly accepted and returned by Kapil)
Feb 25
Bills Sent for Collection A/c
Dr.
21,000
To Bills Receivable A/c
21,000
(Being the bill sent for collection to bank)
Mar 04
Kapil A/c
Dr.
21,100
To Bills Sent for Collection A/c
21,000
To Bank A/c
100
(Being the bill dishonoured by Kapil and noting charges ₹ 100 are incurred and paid by bank)
Books of Kapil
Journal Entries
Date
Particulars
L.F
Dr
Cr
2015
Feb 01
Purchases A/c
Dr.
21,000
To Gaurav A/c
21,000
(Being goods purchased from Gaurav)
Feb 01
Gaurav A/c
Dr.
21,000
To Bills Payable A/c
21,000
(Being the bill from Gaurav for the amount due accepted and returned)
Mar 04
Bills Payable A/c
Dr.
21,000
Noting Charges A/c
Dr.
100
To Gaurav A/c
21,000
(Being the bill dishonoured and the noting charges are incurred)
19. On Feb. 14, 2015 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 Apr.10, 2015 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
Books of Rashmi
Journal Entries
Date
Particulars
L.F
Dr
Cr
2015
Feb 14
Alka A/c
Dr.
7,500
To Sales A/c
7,500
(Being goods sold to Alka)
Feb 14
Cash A/c
Dr.
500
Bills Receivable A/c
Dr.
7000
To Alka A/c
7,500
(Being the liability partially settled by cash and bill of exchange drawn for the rest of the amount, duly accepted and returned by Alka)
Apr 10
Alka A/c
Dr.
7,000
To Bills Receivable A/c
7,000
(Being the bill cancelled as requested by Alka)
Apr 10
Cash A/c
Dr.
2,000
To Alka A/c
2,000
(Being the bill partially settled by Alka in cash)
Apr 10
Alka A/c
Dr.
500
To Interest A/c
500
(Being interest charged to Alka due to cancellation of the bill)
Apr 10
Bills Receivable A/c
Dr.
5,500
To Alka A/c
5,500
(Being bill drawn again for the rest of the liability)
Jun 13
Cash A/c
Dr.
5,500
To Bills Receivable A/c
5,500
(Being the bill matured and duly met by paying in cash)
Books of Alka
Journal Entries
Date
Particulars
L.F
Dr
Cr
2015
Feb 14
Purchases A/c
Dr.
7,500
To Rashmi A/c
7,500
(Being goods purchased from Rashmi)
Feb 14
Rashmi A/c
Dr.
500
To Cash A/c
500
To Bills Payable A/c
7,000
(Being the liability is partially settled through paying ₹ 500 and bill is accepted and returned for the rest of the amount)
Apr 10
Bills Payable A/c
Dr.
7,000
To Rashmi A/c
7,000
(Being the bill is cancelled upon request)
Apr 10
Rashmi A/c
Dr.
2,000
To Cash A/c
2,000
(Being the liability is partially settled through payment of cash)
Apr 10
Interest A/c
Dr.
500
To Rashmi A/c
500
(Being interest paid as the bill is cancelled)
Apr 10
Rashmi A/c
Dr.
5,500
To Bills Payable A/c
5,500
(Being the new bill accepted and returned)
Jun 13
Bills Payable A/c
Dr.
5,500
To Cash A/c
5,500
(Being the new bill matured and settled through payment of cash)
20. Nikhil sold goods for ₹ 23,000 to Akhil on Dec. 01, 2015. 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 Rs.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.

Working Notes:
Discount from Bank (for 2 months) =
23,000×
12
100
×
2
12
=
460
Cash Deposited by Bank =
23,000 – 460
=
22,540
Interest on dishonoured bill (2 months on 23,100) =
23,100 ×
10
100
×
2
12
=
385
Books of Nikhil
Journal Entries
Date
Particulars
L.F
Dr
Cr
2015
Dec 01
Akhil A/c
Dr.
23,000
To Sales A/c
23,000
(Being goods sold to Akhil)
Dec 01
Bills Receivable A/c
Dr.
23,000
To Akhil A/c
23,000
(Being bill drawn and duly accepted and returned by Akhil)
Dec 01
Bank A/c
Dr.
22,540
Discount Charges A/c
Dr.
460
To Bills Receivable A/c
23,000
(Being bill discounted with the bank @12% p.a. for 2 months)
2016
Feb 04
Akhil A/c
Dr.
23,100
To Bank A/c
23,100
(Being the bill dishonoured on the maturity date by Akhil and the liability is restored)
Feb 04
Akhil A/c
Dr.
385
To Interest A/c
385
(Being interest on the dishonoured bill)
Feb 04
Bills Receivable A/c
Dr.
23,485
To Akhil A/c
23,485
(Being a second bill drawn and duly accepted and returned by Akhil)
Mar 31
Akhil A/c
Dr.
23,485
To Bills Receivable A/c
23,485
(Being the second bill cancelled as requested by Akhil)
Mar 31
Cash A/c
Dr.
10,000
To Akhil A/c
10,000
(Being cash received from Akhil towards partial settlement of the liability)
Mar 31
Akhil A/c
Dr.
500
To Interest A/c
500
(Being interest charged to Akhil as greed by him)
Mar 31
Bills Receivable A/c
Dr.
13,985
To Akhil A/c
13,985
(Being third bill drawn and duly accepted and returned by Akhil)
May 03
Cash A/c
Dr.
13,985
To Bills Receivable A/c
13,985
(Being third bill matured and settled on the date of matured by paying cash)
Books of Akhil
Journal Entries
Date
Particulars
L.F
Dr
Cr
2015
Dec 01
Purchases A/c
Dr.
23,000
To Nikhil A/c
23,000
(Being goods purchased from Nikhil)
Dec 01
Nikhil A/c
Dr.
23,000
To Bills Payable A/c
23,000
(Being bill for the credit amount duly accepted and returned to Nikhil)
2016
Feb 04
Bill Payable A/c
Dr.
23,000
Noting Charges A/c
Dr.
100
To Nikhil A/c
23,100
(Being bill dishonoured and ₹ 100 noting charges incurred)
Feb 04
Interest A/c
Dr.
385
To Nikhil A/c
385
(Being interest agreed to pay due to dishonouring of the bill)
Feb 04
Nikhil A/c
Dr.
23,485
To Bills Payable A/c
23,485
(Being second bill drawn by Nikhil and accepted and returned)
Mar 31
Bills Payable A/c
Dr.
23,485
To Nikhil A/c
23,485
(Being second bill cancelled upon request, before maturity date is reached)
Mar 31
Nikhil A/c
Dr.
10,000
To Cash A/c
10,000
(Being cash paid to Nikhil to partially settle the liability)
Mar 31
Interest A/c
Dr.
500
To Nikhil A/c
500
(Being interest agreed to pay as bill is cancelled upon request)
Mar 31
Nikhil A/c
Dr.
13,985
To Bills Payable A/c
13,985
(Being a third bill drawn and duly accepted and returned to Nikhil)
May 03
Bills Payable A/c
Dr.
13,985
To Cash A/c
13,985
(Being the third bill matured and settled through cash payment)
21. On Jan 01, 2015 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.
Books of Vibha
Journal Entries
Date
Particulars
L.F
Dr
Cr
2015
Jan 01
Sudha A/c
Dr.
18,000
To Sales A/c
18,000
(Being goods sold to Sudha)
Jan 01
Bills Receivable A/c
Dr.
18,000
To Sudha A/c
18,000
(Being bill is drawn and the same is accepted and returned by Sudha)
Jan 01
Geeta A/c
Dr.
18,000
To Bills Receivable A/c
18,000
(Being bill is endorsed in favour of Geeta)
Feb 27
Sudha A/c
Dr.
18,000
To Geeta A/c
18,000
(Being bill is cancelled as requested by Sudha. The liability of the debtor and the creditor are restored.)
Feb 27
Sudha A/c
Dr.
200
To Interest A/c
200
(Being interest charged to Sudha for cancellation of the bill)
Feb 27
Geeta A/c
Dr.
18,000
To Cash A/c
18,000
(Being Geeta’s credit settled by payment through cash)
Feb 27
Bills Receivable A/c
Dr.
18,200
To Sudha A/c
18,200
(Being a second bill drawn and the draft is accepted and returned by Sudha)
Mar 30
Cash A/c
Dr.
18,200
To Bills Receivable A/c
18,200
(Being bill settled by Sudha on reaching maturity, by payment through cash)
22. Following was the position of debtor and creditor of Gautam as on 1.1.2015.
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 2015:
Jan 02
Drew on Babu at two months after date at full settlement for ₹ 4,800. Babu accepted the bill and returned it on 5.1.2015 .
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 received 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.
Bills Receivable and Bills Payable books are recorded with only bills of exchanges as these are drawn by the firm owners. So, the promissory note transactions will be recorded in the journal (not in the Bills Receivable and Bills Payable books)
Bills Receivable Book
No. of Bill
Date Received
Date of Bill
From Whom Received
Drawer
Acceptor
Where payable
Term
Due date
Ledger Folio
Amount
Cash Book Folio
Remarks
0001
Jan 02
Jan 05
Babu
Self
Babu
2 months
Mar 05
4,800
Bills Payable Book
No. of Bill
Date of Bill
To Whom Given
Drawer
Payee
Where payable
Term
Due date
Ledger Folio
Amount paid
Date
Cash Book Folio
Remarks
001
Jan 12
Sheiba
Sheiba
2 months
Mar 15
12,000
002
Jan 25
Anju
Anju
3 months
Apr 28
5,000
Books of Gautam
Journal Entries
Date
Particulars
L.F
Dr
Cr
2015
Jan 02
Discount Allowed A/c
Dr.
200
To Babu A/c
200
(Being discount allowed against acceptance and returning of the bill drawn)
Jan 02
Discount Charges A/c
Dr.
200
To Babu A/c
200
(Being discount allowed against acceptance and returning of the bill drawn)
Jan 04
Discount Allowed A/c
Dr.
50
To Bills Receivable A/c
50
(Being the bill discounted)
Jan 08
Bills Receivable A/c
Dr.
8,000
To Chandrakala A/c
8,000
(Being promissory note received from Chandrakala)
Jan 10
Discount Charges A/c
Dr.
100
To Bills Receivable A/c
100
(Being promissory note received from Chandrakala is discounted with bank)
Jan 22
Bills Receivable A/c
Dr.
14,000
To Anita A/c
14,000
(Being promissory note received from Anita)
Jan 23
Manju A/c
Dr.
14,000
To Bills Receivable A/c
14,000
(Being promissory note received from Anita is endorsed to Manju)
(Being promissory note received from Anita)
Jan 29
Bills Receivable A/c
Dr.
11,500
To Kiran A/c
11,500
(Being promissory note received from Kiran)
23. On Jan. 01, 2015 Harsh accepted a month’s 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

Working Notes:
Discount from Bank (for 1 month) =
10,000×
8
100
×
1
12
=
67
Cash Deposited by Bank =
10,000 – 67
=
9,933
Books of Tanu
Journal Entries
Date
Particulars
L.F
Dr
Cr
2015
Jan 01
Bills Receivable A/c
Dr.
10,000
To Harsh A/c
10,000
(Being bill drawn against Harsh and duly accepted and returned by him, to accommodate self)
Jan 01
Bank A/c
Dr.
9,933
Discount Charges A/c
Dr.
67
To Bills Receivable A/c
10,000
(Being the bill discounted from the bank)
Feb 04
Harsh A/c
Dr.
10,000
To Bank A/c
10,000
(Being bills is settled by paything Harsh through cheque)
Books of Harsh
Journal Entries
Date
Particulars
L.F
Dr
Cr
2015
Jan 01
Tanu A/c
Dr.
10,000
To Bills Payable A/c
10,000
(Being bill of exchange duly accepted and returned to Tanu to accommodate him)
Feb 04
Bank A/c
Dr.
10,000
To Tanu A/c
10,000
(Being cheque received from Tanu to settle the bill)
Feb 04
Bills Payable A/c
Dr.
10,000
To Bank A/c
10,000
(Being the bill settled with the bank by paything through cheque)
24. Ritesh and Naina were in need of funds temporarily. On August 01 2015 Ritesh drew upon Naina a bill for ₹ 12,000 for 4 months. Naina Accepted the bill and returned to Ritesh. Ritesh discounted the Bill @ 8% p.a. Half amount of the discounted bill remitted to Naina. On due date, Ritesh sent the required sum to Naina, who met the bill. Journalise the transaction in the books of both the parties.
Working Notes:
Discount from Bank (for 4 months) =
12,000×
8
100
×
4
12
=
320
Cash Deposited by Bank =
12,000 – 320
=
11,680
Discount charges shares with Naina =
320 ×
1
2
=
160
As it is a mutual understaning that the accommodated funds should be shared equally, the discount amount is also borne equally by both the parties.
Books of Ritesh
Journal Entries
Date
Particulars
L.F
Dr
Cr
2015
Aug 01
Bills Receivable A/c
Dr.
12,000
To Naina A/c
12,000
(Being bill drawn against Naina and duly accepted and returned by him, to accommodate self)
Aug 01
Bank A/c
Dr.
11,680
Discount Charges A/c
Dr.
320
To Bills Receivable A/c
12,000
(Being bill discounted with the bank)
Aug 01
Naina A/c
Dr.
6,000
To Bank A/c
5,840
To Discount Charges A/c
160
(Being half of the discounted amount remitted to Naina)
Dec 04
Naina A/c
Dr.
6,000
To Bank A/c
6,000
(Being the rest of the amount transferred to Naina so that she can meet the bill)
Books of Naina
Journal Entries
Date
Particulars
L.F
Dr
Cr
2015
Aug 01
Ritesh A/c
Dr.
12,000
To Bills Payable A/c
12,000
(Being bill drawn by Ritesh duly accepted and returned by him, to accommodate him)
Aug 01
Bank A/c
Dr.
5,840
Discount Charges A/c
Dr.
160
To Ritesh A/c
6,000
(Being half of the discounted amount remitted by Ritesh)
Dec 04
Bank A/c
Dr.
6,000
To Ritesh A/c
6,000
(Being rest half of the bill amount remitted by Ritesh)
Dec 04
Bills Payable A/c
Dr.
12,000
To Bank A/c
12,000
(Being the bill matured and the liability is discharged)
25. On Jan. 01, 2014, Bhanu and Naman drew on each other a bill for ₹ 8,000 payable 3 months after the due date for their Mutual benefit. On January 02 they discounted with their bank each other’s bill at 5% p.a. on the due date each met his Own’s acceptance. Give journal entry in the books of Bhanu and Naman.
Working Notes:
Discount from Bank (for 3 months) =
8,000×
5
100
×
3
12
=
100
Cash Deposited by Bank =
8,000 – 100
=
7,900
Books of Bhanu
Journal Entries
Date
Particulars
L.F
Dr
Cr
2015
Jan 01
Bills Receivable A/c
Dr.
8,000
To Naman A/c
8,000
(Being bill drawn on Naman duly accepted and returned by him, to accommodate self)
Jan 01
Naman A/c
Dr.
8,000
To Bills Payable A/c
8,000
(Being bill drawn by Naman duly accepted and returned to him, to accommodate him)
Jan 02
Bank A/c
Dr.
7,900
Discount Charges A/c
Dr.
100
To Bills Receivable A/c
8,000
(Being bill discounted with bank)
Apr 04
Bills Payable A/c
Dr.
8,000
To Bank A/c
8,000
(Being bill is matured and duly met)
Books of Naman
Journal Entries
Date
Particulars
L.F
Dr
Cr
2015
Jan 01
Bills Receivable A/c
Dr.
8,000
To Naman A/c
8,000
(Being bill drawn on Bhanu duly accepted and returned by him, to accommodate self)
Jan 01
Naman A/c
Dr.
8,000
To Bills Payable A/c
8,000
(Being bill drawn by Bhanu duly accepted and returned to him, to accommodate him)
Jan 02
Bank A/c
Dr.
7,900
Discount Charges A/c
Dr.
100
To Bills Receivable A/c
8,000
(Being bill discounted with bank)
Apr 04
Bills Payable A/c
Dr.
8,000
To Bank A/c
8,000
(Being bill is matured and duly met)
26. On Nov. 01, 2014 Sonia drawn a bill on Sunny for ₹ 15,000 for 3 months for mutual accommodation. Sunny accepts the bill and return it to sonia. Sonia discounted the same with his bankers @ 6% p.a. The proceeds are shared between Sonia and Sunny in proportion of ⅔rd, ⅓rd respectively. On the due date sonia remits his proportion to Sunny who fails to met the bill and as a result sonia has to meet it. Sunny Give a fresh acceptance for the amount due to sonia plus interest of ₹ 100 Sunny meet his second acceptance on due date. Record the necessary journal entries in the books of sonia and sunny.
The duration of maturity in the second case is not provided in the problem. So, it is assumed that in the second instance also the bill is drawn for 3 months.

Working Notes:
Discount from Bank (for 2 months) =
15,000×
6
100
×
3
12
=
225
Cash Deposited by Bank =
15,000 – 225
=
14,775
Sonia’s Proceeds =
14,775 ×
2
3
=
9,850
Sunny’s Proceeds =
14,775 ×
1
3
=
4,925
Sunny’s Discount Share =
225 ×
1
3
=
75
Books of Sonia
Journal Entries
Date
Particulars
L.F
Dr
Cr
2014
Nov 01
Bills Receivable A/c
Dr.
15,000
To Sunny A/c
15,000
(Being bill drawn on Sunny duly accepted and returned by him, to accommodate both)
Nov 01
Bank A/c
Dr.
14,775
Discount Charges A/c
Dr.
225
To Bills Receivable A/c
8,000
(Being bill discounted with bank)
Nov 01
Sunny A/c
Dr.
5,000
To Cash A/c
4,925
To Discount Charges A/c
75
(Being sunny’s proceeds are transferred to him while retaining the discount)
2015
Feb 04
Sunny A/c
Dr.
10,000
To Cash A/c
10,000
(Being rest of the bill amount transferred to Sunny to enable him meet the bill)
Feb 04
Sunny A/c
Dr.
15,000
To Bank A/c
15,000
(Being the bill dishonoured by Sunny)
Feb 04
Sunny A/c
Dr.
100
To Interest A/c
100
(Being interest charged to Sunny as he dishonoured the bill)
Feb 04
Bills Receivable A/c
Dr.
15,100
To Sunny A/c
15,100
(Being bill drawn on Sunny, duly accepted and returned by him)
May 07
Cash A/c
Dr.
15,100
To Bills Receivable A/c
15,100
(Being bill matured on the due date and met by Sunny)
Books of Sunny
Journal Entries
Date
Particulars
L.F
Dr
Cr
2014
Nov 01
Sonia A/c
Dr.
15,000
To Bills Payable A/c
15,000
(Being bill drawn by Sonia duly accepted and returned to her, to accommodate both)
Nov 01
Cash A/c
Dr.
4,925
Discount Charges A/c
Dr.
75
To Sonia A/c
5,000
(Being received the accommodation amount from Sonia)
2015
Feb 04
Cash A/c
Dr.
10,000
To Sonia A/c
10,000
(Being cash received from Sonia to settle the bill)
Feb 04
Bills Payable A/c
Dr.
15,000
To Sonia A/c
15,000
(Being amount liable to Sonia due to dishonouring of the bill)
Feb 04
Interest A/c
Dr.
100
To Sonia A/c
100
(Being interest payable to Sonia due to dishonouring of the bill)
Feb 04
Sonia A/c
Dr.
15,100
To Bills Payable A/c
15,100
(Being bills drawn by Sonia, duly accepted and returned to her)
May 07
Bils Receivable A/c
Dr.
15,100
To Cash A/c
15,100
(Being the bill matured and settled by paying cash)