Darshan sold goods for Rs 40,000 to varun on 8 1 2006 and drew upon him a bill of exchange - Accountancy - Bills of Exchange

Question

Darshan sold goods for Rs 40,000 to varun on 8 1 2006 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 immidiately discounted the bill @ 6% p a with his
bank
When the bill was endorsed immidiately 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

Manisha Arora · Accepted Answer

Journal Entry
In the Books of
Darshan

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

2006

Jan 01
Varun
Dr

40,000

To Sales A/c

40,000

(Goods sold on credit)

Jan 08
Bills Receivable A/c
Dr

40,000

To Varun

40,000

(Bill was drawn and accepted)

When the Bill was retained by
Darshan till maturity and received on due date

Mar 11
Cash/Bank A/c
Dr

40,000

To Bills Receivable A/c

40,000

(Bill retained till maturity and received
on maturity)

When the Bill was discounted
@6% with his Bank

Jan 08
Bank A/c
Dr

39,600

Discount A/c
Dr

400

To Bills Receivable A/c

40,000

(Bill was discounted @6% before 2
months)

When the Bill was endorsed
immediately by Darshan to his creditor Suresh

Suresh
Dr

40,000

To Bills Receivable

40,000

(Bill was endorsed)

When three days before
maturity the Bill was sent to Bank for
Collection

Mar 05
Bill sent for collection A/c
Dr

40,000

To Bills Receivable A/c

40,000

(Bill sent for collection three days
before maturity)

Mar 11
Bank A/c
Dr

40,000

To Bill sent for collection A/c

40,000

(Bill sent for collection has
been realized on due date)

Journal Entry
In the Books of
Darshan

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

2006

Jan 01
Purchases A/c
Dr

40,000

To Darshan

40,000

(Goods purchsed on credit)

Jan 08
Darshan
Dr

40,000

To Bills Payable A/c

40,000

(Bill was accepted)

In all the four cases the same
entry will be passed

Mar 11
Bills Payable A/c
Dr

40,000

To Cash/Bank A/c

40,000

(Bill was paid on due date)

Journal Entry In the Books of Darshan
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
2006
Jan. 01	Varun	Dr.		40,000
	To Sales A/c				40,000
	(Goods sold on credit)

Jan. 08	Bills Receivable A/c	Dr.		40,000
	To Varun				40,000
	(Bill was drawn and accepted)

	*When the Bill was retained by Darshan till maturity and received on due date*

Mar.11	Cash/Bank A/c	Dr.		40,000
	To Bills Receivable A/c				40,000
	(Bill retained till maturity and received on maturity)

	*When the Bill was discounted @6% with his Bank*

Jan.08	Bank A/c	Dr.		39,600
	Discount A/c	Dr.		400
	To Bills Receivable A/c				40,000
	(Bill was discounted @6% before 2 months)

	*When the Bill was endorsed immediately by Darshan to his creditor Suresh*

	Suresh	Dr.		40,000
	To Bills Receivable				40,000
	(Bill was endorsed)

	*When three days before maturity the Bill was sent to Bank for Collection*

Mar.05	Bill sent for collection A/c	Dr.		40,000
	To Bills Receivable A/c				40,000
	(Bill sent for collection three days before maturity)

Mar.11	Bank A/c	Dr.		40,000
	To Bill sent for collection A/c				40,000
	(Bill sent for collection has been realized on due date)