On 1st feb 2001, A sold goods to B for Rs 40,000 B pays Rs 10,000 in cash and - Accountancy - Bills of Exchange

Question

On 1st feb 2001, A sold goods to B for Rs 40,000 B pays Rs
10,000 in cash and accepted a three months bill for the balance On
the due date, B expressed his inability to meet the bill and
offered Rs 12,000 in cash and to accept a new bill for one month
for the balance plus interest at 18% p a A agrees to the proposal
On the due date the bill was duly honoured by B Pass entries in the
books of A and B

Manisha Arora · Accepted Answer

Journal Entry
â€‹In the Books of A

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

2001

Feb 01
B
Dr

40,000

To Sales A/c

40,000

(Goods sold on Credit)

Feb 01
Cash/Bank A/c
Dr

10,000

Bills Receivable A/c
Dr

30,000

To B

40,000

(Cash received for the partial amount and
Bill is drawn for the rest of amount)

May 04
B
Dr

30,0000

To Bills Receivable A/c

30,000

(Bill dishonoured on due date)

May 04
B
Dr

270

To Interest A/c

270

(Interest of Rs 270 (Rs 30,000 @ 18% for 1
month has been due)

May 04
Cash/Bank A/c
Dr

12,000

To B

12,000

(Cash received from B)

May 04
Bills Receivable A/c
Dr

30,270

To B

30,270

(New bill is drawn)

Jun 07
Cash/Bank A/c
Dr

30,270

To Bills Receivable A/c

30,270

(Amount received on maturity of bill)

â€‹`
â€‹Journal Entry
â€‹ â€‹ â€‹
â€‹
â€‹ In the Books of B

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

2001

Feb 01
Purchases A/c
Dr

40,000

To A

40,000

(Goods purchased on Credit)

Feb 01
A
Dr

40,000

To Cash/Bank A/c

10,000

To Bills Payable A/c

30,000

(Cash paid for the partial amount and Bill
is accepted for the rest of amount)

May 04
Bills Payable A/c
Dr

30,000

To A

30,000

(Bill dishonoured on due date)

May 04
Interest A/c
Dr

270

To A

270

(Interest of Rs 270 (Rs 30,000 @ 18% for 1
month has been due)

May 04
A
Dr

12,000

To Cash/Bank A/c

12,000

(Cash received from B)

May 04
A
Dr

30,270

To Bills Payable A/c

30,270

(New bill is accepted)

Jun 07
Bills Payable A/c
Dr

30,270

To Cash/Bank A/c

30,270

(Amount paid on maturity of bill)

Journal Entry In the Books of A
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
2001
Feb.01	B	Dr.		40,000
	To Sales A/c				40,000
	(Goods sold on Credit)

Feb.01	Cash/Bank A/c	Dr.		10,000
	Bills Receivable A/c	Dr.		30,000
	To B				40,000
	(Cash received for the partial amount and Bill is drawn for the rest of amount)

May 04	B	Dr.		30,0000
	To Bills Receivable A/c				30,000
	(Bill dishonoured on due date)

May 04	B	Dr		270
	To Interest A/c				270
	(Interest of Rs 270 (Rs 30,000 @ 18% for 1 month has been due)

May 04	Cash/Bank A/c	Dr.		12,000
	To B				12,000
	(Cash received from B)

May 04	Bills Receivable A/c	Dr.		30,270
	To B				30,270
	(New bill is drawn)

Jun.07	Cash/Bank A/c	Dr.		30,270
	To Bills Receivable A/c				30,270
	(Amount received on maturity of bill)

` Journal Entry In the Books of B
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
2001
Feb.01	Purchases A/c	Dr.		40,000
	To A				40,000
	(Goods purchased on Credit)

Feb.01	A	Dr.		40,000
	To Cash/Bank A/c				10,000
	To Bills Payable A/c				30,000
	(Cash paid for the partial amount and Bill is accepted for the rest of amount)

May 04	Bills Payable A/c	Dr.		30,000
	To A				30,000
	(Bill dishonoured on due date)

May 04	Interest A/c	Dr		270
	To A				270
	(Interest of Rs 270 (Rs 30,000 @ 18% for 1 month has been due)

May 04	A	Dr.		12,000
	To Cash/Bank A/c				12,000
	(Cash received from B)

May 04	A	Dr.		30,270
	To Bills Payable A/c				30,270
	(New bill is accepted)

Jun.07	Bills Payable A/c	Dr.		30,270
	To Cash/Bank A/c				30,270
	(Amount paid on maturity of bill)