Lilly sold goods to Mathew on 1.3.2002 for Rs.12000 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 Negotiable Instruments Act 1881. The bill was dishonoured by Mathew and Lilly paid Rs.45 asnoting 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 Mathews account in the books of Lilly and Lillys account in the books of Mathew.
Books of Lily Journal | |||||
Date | Particulars | L.F. | Debit Amount | Credit Amount | |
2002 Mar.01
Mar.01
Mar. 01
May 03
May 03
May.03
May.08 |
Mathew To Sales A/c (Goods sold to Mathew)
Bills Receivable A/c To Mathew (Two months acceptance received from Mathew)
Bank A/c Discount A/c To Bills Receivable A/c (Mathew’s bill discounted with Bank)
Mathew To Bank A/c (Mathew’s acceptance dishonoured)
Bank A/c To Cash A/c (Noting Charges paid on account of dishonour of Mathew’s acceptance)
Mathew To Interest A/c (Interest credited to Mathew’s on account of bill dishonoured)
Bank A/c To Mathew (Amount received from Mathew)
|
Dr.
Dr.
Dr. Dr.
Dr.
Dr.
Dr.
Dr. |
|
12,000
12,000
11,820 180
12,045
45
1,440
13,485 |
12,000
12,000
12,000
12,045
45
1,440
13,485
|
Ledger Mathew’s Account | |||||||
Dr. | Cr. | ||||||
Date | Particulars | J.F. | Amount Rs | Date | Particulars | J.F. | Amount Rs |
Mar.01 | Sales |
| 12,000 | Mar.01 | Bills Receivable |
| 12,000 |
May.03 | Bank |
| 12,045 | May.08 | Bank |
| 13,485 |
May.03 | Interest |
| 1,440 |
|
|
|
|
|
|
| 25,485 |
|
|
| 25,485 |
|
|
|
|
|
|
|
|
Books of Mathew Journal | |||||
Date | Particulars | L.F. | Debit Amount | Credit Amount | |
2002 Mar.01
Mar.01
May 03
May 03
May 08 |
Purchases A/c To Lily (Goods bought from Lily)
Lily To Bills Payable A/c (Bill drawn by Lily payable after two months accepted)
Bills Payable A/c Noting Charges A/c To Lily (Bill drawn by Lily dishonoured)
Interest A/c To Lily (Interest due to Lily for dishnour of bill)
Lily To Bank A/c (Lily’s due cleared by paying through cheque)
|
Dr.
Dr.
Dr. Dr.
Dr.
Dr. |
|
12,000
12,000
12,000 45
1,440
13,485 |
12,000
12,000
12,045
1,440
13,485 |
Ledger Lily’s Account | |||||||
Dr. | Cr. | ||||||
Date | Particulars | J.F. | Amount Rs | Date | Particulars | J.F. | Amount Rs |
2002 Mar.01 May.08 |
Bills Payable Bank |
| 12,000 13,485 | 2002 Mar.01 May.03 May.03 May.03 |
Purchases Bills Payable Noting Charges Interest |
|
12,000 12,000 45 1,440 |
|
|
| 25,485 |
|
|
| 25,485 |
|
|
|
|
|
|
|
|
Note: In the solution, it has been assumed that the holiday is an official holiday. If this holiday would have been an emergency holiday, then the date of dishonour of the bill and date of settlement of the due would have been taken as May 05, 2002 and May 10, 2002 instead of May 03, 2005 and May 08, 2002.