3) A sold goods to B on May 1st, 2011 for Rs 30,000 on credit and drew upon him a - Accountancy - Bills of Exchange

Question

3) A sold goods to B on May 1st, 2011 for Rs 30,000 on credit and
drew upon him a bill for the same amount payable after 2 months B
accepted the bill and returned it to A On date of maturity, B fails
to make payment of bill Noting charges amounted to Rs 100

Record the Journal Entries in the books of A and B if
Case 1 : A retains the bill till the date of maturity and also paid
the noting charges
Case 2 : A discounts the bill from his bank on 4th June @ 12% per
annum Noting charges has been paid by bank
Case 3 : A endorses the bill in favour of C on June 1 C paid the
noting charges
Case 4 : A sent the bill to his bank for collection on July 1 Bank
paid the noting charges

Neha Chopra · Accepted Answer

Dear Student,

In the books of A

Date
Particulars

Debit (in Rs)

Credit (in Rs)

May 1, 2011
B's
A/c

Dr

30,000

To Sales
A/c

30,000

(Sales made to
B)

Bills receivables
A/c

Dr

30,000

To B's
A/c

30,000

(Bill received from
B)

CASE 1
B fails to
pay bill on maturity

July 4, 2011
B's
A/c

Dr

31,000

To Bills receivables
A/c

30,000

To Cash
A/c

1,000

(Bill dishonoured on
maturity & noting charges paid)

CASE 2
A discounts
the bill with Bank

June 4, 2011
Bank
A/c

Dr

29,700

Discount
A/c

300

To Bills receivables
A/c

30,000

(Bill discounted with
bank)

July 4, 2011
B's
A/c

Dr

30,100

To Bank
A/c

30,100

(Bill dishonoured on
due date & noting charges paid by Bank

CASE 3
A Endorses
the Bill to C

Jun 1, 2011
C's
A/c

Dr

30,000

To Bills receivables
A/c

30,000

(Bill endorsed to
C)

Jul 4, 2011
B's
A/c

Dr

30,100

To C's
A/c

30,100

(Bill dishonoured
& C paid the noting charges)

CASE 4
A sent the
Bill for collection

Jul 1, 2011
Bills sent for
collection A/c

Dr

30,000

To Bills receivables
A/câ€‹

30,000

(Bill sent to Bank for
collection)

Jul 4, 2011
B's
A/c

Dr

30,100

To Bill sent for
collection A/c

30,000

To Noting Charges
A/c

100

In the
books of B

Date
Particulars

Debit (in Rs)

Credit (in Rs)

May 1, 2011
Purchases
A/c

Dr

30,000

To A's
A/c

30,000

(Purchases from
A)

A's
A/c

Dr

30,000

To Bills Payables
A/c

30,000

(Bill
accepted)

Regards,

Date	Particulars		Debit (in Rs)	Credit (in Rs)
May 1, 2011	B's A/c	Dr	30,000
	To Sales A/c			30,000
	(Sales made to B)

	Bills receivables A/c	Dr	30,000
	To B's A/c			30,000
	(Bill received from B)

CASE 1	B fails to pay bill on maturity
July 4, 2011	B's A/c	Dr	31,000
	To Bills receivables A/c			30,000
	To Cash A/c			1,000
	(Bill dishonoured on maturity & noting charges paid)

CASE 2	A discounts the bill with Bank
June 4, 2011	Bank A/c	Dr	29,700
	Discount A/c		300
	To Bills receivables A/c			30,000
	(Bill discounted with bank)

July 4, 2011	B's A/c	Dr	30,100
	To Bank A/c			30,100
	(Bill dishonoured on due date & noting charges paid by Bank

CASE 3	A Endorses the Bill to C
Jun 1, 2011	C's A/c	Dr	30,000
	To Bills receivables A/c			30,000
	(Bill endorsed to C)

Jul 4, 2011	B's A/c	Dr	30,100
	To C's A/c			30,100
	(Bill dishonoured & C paid the noting charges)

CASE 4	A sent the Bill for collection
Jul 1, 2011	Bills sent for collection A/c	Dr	30,000
	To Bills receivables A/c			30,000
	(Bill sent to Bank for collection)

Jul 4, 2011	B's A/c	Dr	30,100
	To Bill sent for collection A/c			30,000
	To Noting Charges A/c			100