Nikhil sold goods for Rs 23,000 to Akhil on Dec 01, 2005 He drew upon Akhil a bill - Accountancy - Bills of Exchange

Question

Nikhil sold goods
for Rs 23,000 to Akhil on Dec 01, 2005 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 Rs
10,000 in cash immediately and drew a third bill upon him including
interest of Rs 500 Nikhil agreed to Akhilâ€™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 Akhilâ€™s account in the books of
Nikhil and Nikhilâ€™s account in the books of
Akhil

Saurabh Mehta · Accepted Answer

Books of Nikhil
Journal

Date

Particulars

L F

Debit Amount Rs

Credit Amount Rs

2005

Dec 01

Akhil

Dr

23,000

To Sales
A/c

23,000

(Goods sold to Akhil)

Dec 01

Bills Receivable A/c

Dr

23,000

To Akhil

23,000

(Akhil's acceptance
received)

Dec 01

Bank A/c

Dr

22,540

Discount A/c

Dr

460

To Bills Receivable
A/c

23,000

(Akhil's acceptance
discounted at 12% p a with
bank)

2006

Feb 04

Akhil

Dr

23,100

To Bank
A/c

23,100

(Akhil's acceptance
dishonoured, bank paid
Rs 100 as noting charges)

Feb 04

Akhil

Dr

385

To Interest
A/c

385

(Interest credited on account of bill dishonoured
at 10% p a for two months)

Feb 04

Bills Receivable A/c

Dr

23,485

To Akhil

23,485

(New acceptance received from Akhil for
next two months received)

Apr 01

Akhil

Dr

23,485

To Bills Receivable
A/c

23,485

(The second bill cancelled one week before
maturity)

Apr 01

Cash A/c

Dr

10,000

To Akhil

10,000

(Cash received from Akhil)

Apr 01

Akhil

Dr

500

To Interest
A/c

500

(Interest due from Akhil
for the bill)

Apr 01

Bills Receivable A/c

Dr

13,985

To Akhil

13,985

(Bill from Akhil
received)

May04

Cash A/c

Dr

13,985

To Bills Receivable
A/c

13,985

(The third bill met on due date)

Akhil's Account

Dr

Cr

Date

Particulars

J F

Amount Rs

Date

Particulars

J F

Amount Rs

2005

Dec 01

Sales

23,000

Dec 01

Bills Receivable

23,000

2006

Feb 04

Bank

23,100

Feb 04

Bills Receivable

23,485

Feb 04

Interest

385

Apr 01

Cash

10,000

Apr 01

Bills Receivable

23,485

Apr 01

Bills Receivable

13,985

Apr 01

Interest

500

70,470

Books of Akhil
Journal

Date

Particulars

L F

Debit Amount

Rs

Credit Amount

Rs

2005

Dec 01

Purchases A/c

Dr

23,000

To Nikhil

23,000

(Goods bought from Nikhil)

Dec 01

Nikhil

Dr

23,000

To Bills Payable
A/c

23,000

(Bill drawn by Nikhil payable after two
months
accepted)

2006

Feb 04

Bills Payable A/c

Dr

23,000

Noting Charges A/c

Dr

100

To Nikhil

23,100

(Bill dishonoured on due
date and Rs 100 paid by
the holder of bill)

Feb 04

Interest A/c

Dr

385

To Nikhil
A/c

385

(Interest due to Nikhil for the bill dishonoured)

Feb 04

Nikhil

Dr

23,485

To Bills Payable
A/c

23,485

(New bill accepted payable after two
months)

Apr 01

Bills Payable A/c

Dr

23,485

To Nikhil

23,485

(Bill cancelled before maturity)

Apr 01

Nikhil

Dr

10,000

To Cash
A/c

10,000

(Cash paid to Nikhil)

Apr 01

Interest A/c

Dr

500

To Nikhil

500

(Interest due to Nikhil for bill
cancellation)

Apr 01

Nikhil

Dr

13,985

To Bills Payable
A/c

13,985

(New bill accepted payable after one
month)

May04

Bills Payable A/c

Dr

13,985

To Cash
A/c

13,985

(The third bill met on maturity)

Nikhil Account

Dr

Cr

Date

Particulars

J F

Amount Rs

Date

Particulars

J F

Amount Rs

2005

Dec 01

Bills Payable

23,000

Dec 01

Purchases

23,000

2006

Feb 04

Bills Payable

23,485

Feb 04

Bills Payable

23,000

Apr 01

Cash

10,000

Feb 04

Noting Charge

100

Apr 01

Bills Payable

13,985

Feb 04

Interest

385

Apr 01

Bills Payable

23,485

Apr 01

Interest

500

70,470

Akhil's Account
Dr.							Cr.
Date	Particulars	J.F.	Amount Rs	Date	Particulars	J.F.	Amount Rs
2005				2005
Dec.01	Sales		23,000	Dec.01	Bills Receivable		23,000
2006				2006
Feb.04	Bank		23,100	Feb.04	Bills Receivable		23,485
Feb.04	Interest		385	Apr.01	Cash		10,000
Apr.01	Bills Receivable		23,485	Apr.01	Bills Receivable		13,985
Apr.01	Interest		500
			70,470				70,470

Nikhil Account
Dr.							Cr.
Date	Particulars	J.F.	Amount Rs	Date	Particulars	J.F.	Amount Rs
2005				2005
Dec.01	Bills Payable		23,000	Dec.01	Purchases		23,000
2006				2006
Feb.04	Bills Payable		23,485	Feb.04	Bills Payable		23,000
Apr.01	Cash		10,000	Feb.04	Noting Charge		100
Apr.01	Bills Payable		13,985	Feb.04	Interest		385
				Apr.01	Bills Payable		23,485
				Apr.01	Interest		500
			70,470				70,470

Books of Nikhil Journal
Date			Particulars				L.F.	Debit Amount Rs	Credit Amount Rs
2005
Dec.01	Akhil					Dr.		23,000
		To Sales A/c							23,000
	(Goods sold to Akhil)

Dec.01	Bills Receivable A/c					Dr.		23,000
		To Akhil							23,000
	(Akhil's acceptance received)

Dec.01	Bank A/c					Dr.		22,540
	Discount A/c					Dr.		460
		To Bills Receivable A/c							23,000
	(Akhil's acceptance discounted at 12% p.a with bank)

2006
Feb.04	Akhil					Dr.		23,100
		To Bank A/c							23,100
	(Akhil's acceptance dishonoured, bank paid Rs 100 as noting charges)

Feb.04	Akhil			Dr.				385
		To Interest A/c							385
	(Interest credited on account of bill dishonoured at 10% p.a. for two months)

Feb.04	Bills Receivable A/c				Dr.			23,485
		To Akhil							23,485
	(New acceptance received from Akhil for next two months received)

Apr.01	Akhil				Dr.			23,485
		To Bills Receivable A/c							23,485
	(The second bill cancelled one week before maturity)

Apr.01	Cash A/c				Dr.			10,000
		To Akhil							10,000
	(Cash received from Akhil)

Apr.01	Akhil				Dr.			500
		To Interest A/c							500
	(Interest due from Akhil for the bill)

Apr.01	Bills Receivable A/c				Dr.			13,985
			To Akhil						13,985
	(Bill from Akhil received)

May04	Cash A/c				Dr.			13,985
			To Bills Receivable A/c						13,985
	(The third bill met on due date)

Books of Akhil Journal
Date			Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2005
Dec.01	Purchases A/c			Dr.		23,000
		To Nikhil					23,000
	(Goods bought from Nikhil)

Dec.01	Nikhil			Dr.		23,000
		To Bills Payable A/c					23,000
	(Bill drawn by Nikhil payable after two months accepted)

2006
Feb.04	Bills Payable A/c			Dr.		23,000
	Noting Charges A/c			Dr.		100
		To Nikhil					23,100
	(Bill dishonoured on due date and Rs 100 paid by the holder of bill)

Feb.04	Interest A/c			Dr.		385
		To Nikhil A/c					385
	(Interest due to Nikhil for the bill dishonoured)

Feb.04	Nikhil			Dr.		23,485
		To Bills Payable A/c					23,485
	(New bill accepted payable after two months)

Apr.01	Bills Payable A/c			Dr.		23,485
		To Nikhil					23,485
	(Bill cancelled before maturity)

Apr.01	Nikhil			Dr.		10,000
		To Cash A/c					10,000
	(Cash paid to Nikhil)

Apr.01	Interest A/c			Dr.		500
		To Nikhil					500
	(Interest due to Nikhil for bill cancellation)

Apr.01	Nikhil			Dr.		13,985
		To Bills Payable A/c					13,985
	(New bill accepted payable after one month)

May04	Bills Payable A/c			Dr.		13,985
		To Cash A/c					13,985
	(The third bill met on maturity)