A sold goods to B on 30th october, 2011 for Rs 14,000 and received three bills for Rs 2,000, Rs - Accountancy - Bills of Exchange

Question

A sold goods to B on 30th october, 2011 for Rs 14,000 and
received three bills for Rs 2,000, Rs 4,000 and Rs 8,000 at 2,3 and
4 months duration respectively He kept the first bill till
maturity; endorsed the 2nd bill in favour of his creditor C and
discounted the third bill on 3rd December, 2011 @ 18% p a The first
and 2nd bills were duly met on maturity but the third bill was
dishonoured, the bank paying Rs 40 as noting charges On 3rd March ,
2011, B paid Rs 3,000 ant the noting charges in cash accepted a new
bill at 3 months after due date for the balance plus Rs 150 as
interest The new bill was met on maturity Give journal entries in
the books of A and B both

Manisha Arora · Accepted Answer

Journal Entry
In the books of A

Date
Particulars
L F
Debit
Amount
(Rs)
Credit
Amount
(Rs)

2011

Oct 01
B
Dr

14,000

To Sales A/c

14,000

(Goods on sold on credit)

Oct 01
Bills Receivable (No 1) A/c
Dr

2,000

Bills Receivable (No 2) A/c

4,000

Bills Receivable (No 3) A/c

8,000

To B

14,000

(Acceptance received from B)

Oct 01
C
Dr

4,000

To Bills Receivable (No 2) A/c

4,000

(The Bill endorsed in favour of creditor,
C)

Dec 3
Bank A/c
Dr

7,760

Discounting Charges A/c
(8,000*18%*2/12)
Dr

240

To Bills Receivable (No 3) A/c

8,000

(Bills Receivable (No 3) has been
discounted with Bank)

2012

Jan 02
Cash/Bank A/c
Dr

2,000

To Bills Receivable (No 1) A/c

2,000

(Bills Receivable (No 1) received on due
date)

Mar 03
B
Dr

8,040

To Cash/Bank A/c

8,040

(Bills Receivable (No 3) dishonoured and
amount paid to Bank with Noting Charges of Rs 40)

Mar 03
B
Dr

150

To Interest

150

(Interest has been due)

Mar 03
Cash A/c
Dr

3,040

To B

3,040

(Cash received from B including noting
charges)

Mar 03
Bills Receivable A/c
Dr

5,150

To B

5,150

(New bill is accepted)

Jun 06
Cash/Bank A/c
Dr

5,150

To Bills Receivable

5,150

(New bill received on due date)

Journal Entry
In the books of B

Date
Particulars
L F
Debit
Amount
(Rs)
Credit
Amount
(Rs)

2011

Oct 01
Purchase A/c
Dr

14,000

To A

14,000

(Goods purchase on credit)

Oct 01
A
Dr

14,000

To Bills Payable (No 1) A/c

2,000

To Bills Payable (No 2) A/c

4,000

To Bills Payable (No 3) A/c

8,000

(Bills are accepted from A)

2012

Jan 02
Bills Payable (No 1)
Dr

2,000

To Cash/Bank A/c

2,000

(Bills Payable (No 1) is paid)

Feb 02
Bills Payable (No 2)

4,000

To Cash/Bank A/c

4,000

(Bills Payable (No 2) is paid)

Mar 03
Bills Payable (No 3)
Dr

8,000

Noting Charges A/c Dr

40

To A

8,040

(Bill has been dishonoured and credit
grants to the creditor for the amount of Bill and Noting
charges)

Mar 03
Interest A/c
Dr

150

To A

150

(Interest due for payment to A)

Mar 03
A
Dr

3,040

To Cash/Bank A/c

3,040

(Cash paid to A including Noting
Charges)

Jun 06
A

5,150

To Bills Payable

5,150

(New bill has been accepted including
Interest)

Jun 06
Bills Payable A/c
Dr

5,150

To Cash/Bank A/c

5,150

(New bill has been paid on due date)

Journal Entry In the books of A
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
2011
Oct. 01	B	Dr.		14,000
	To Sales A/c				14,000
	(Goods on sold on credit)

Oct. 01	Bills Receivable (No. 1) A/c	Dr.		2,000
	Bills Receivable (No. 2) A/c			4,000
	Bills Receivable (No. 3) A/c			8,000
	To B				14,000
	(Acceptance received from B)

Oct. 01	C	Dr.		4,000
	To Bills Receivable (No. 2) A/c				4,000
	(The Bill endorsed in favour of creditor, C)

Dec.3	Bank A/c	Dr.		7,760
	Discounting Charges A/c (8,00018%2/12)	Dr.		240
	To Bills Receivable (No. 3) A/c				8,000
	(Bills Receivable (No. 3) has been discounted with Bank)

2012
Jan. 02	Cash/Bank A/c	Dr.		2,000
	To Bills Receivable (No. 1) A/c				2,000
	(Bills Receivable (No. 1) received on due date)

Mar. 03	B	Dr.		8,040
	To Cash/Bank A/c				8,040
	(Bills Receivable (No. 3) dishonoured and amount paid to Bank with Noting Charges of Rs 40)

Mar. 03	B	Dr.		150
	To Interest				150
	(Interest has been due)

Mar. 03	Cash A/c	Dr.		3,040
	To B				3,040
	(Cash received from B including noting charges)

Mar. 03	Bills Receivable A/c	Dr.		5,150
	To B				5,150
	(New bill is accepted)

Jun.06	Cash/Bank A/c	Dr.		5,150
	To Bills Receivable				5,150
	(New bill received on due date)

Journal Entry In the books of B
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
2011
Oct. 01	Purchase A/c	Dr		14,000
	To A				14,000
	(Goods purchase on credit)

Oct. 01	A	Dr		14,000
	To Bills Payable (No. 1) A/c				2,000
	To Bills Payable (No. 2) A/c				4,000
	To Bills Payable (No. 3) A/c				8,000
	(Bills are accepted from A)
2012
Jan.02	Bills Payable (No. 1)	Dr.		2,000
	To Cash/Bank A/c				2,000
	(Bills Payable (No.1) is paid)

Feb. 02	Bills Payable (No. 2)			4,000
	To Cash/Bank A/c				4,000
	(Bills Payable (No.2) is paid)

Mar.03	Bills Payable (No.3)	Dr.		8,000
	Noting Charges A/c Dr			40
	To A				8,040
	(Bill has been dishonoured and credit grants to the creditor for the amount of Bill and Noting charges)

Mar.03	Interest A/c	Dr.		150
	To A				150
	(Interest due for payment to A)

Mar.03	A	Dr.		3,040
	To Cash/Bank A/c				3,040
	(Cash paid to A including Noting Charges)

Jun.06	A			5,150
	To Bills Payable				5,150
	(New bill has been accepted including Interest)

Jun.06	Bills Payable A/c	Dr.		5,150
	To Cash/Bank A/c				5,150
	(New bill has been paid on due date)