NCERT Solutions For Class 11 Financial Accounting Part I Chapter 8 Bill Of Exchange

NCERT Solutions For Class 11 Financial Accounting Part I Chapter 8 Bill Of Exchange

Class 11 Financial Accounting Part I Chapter 8 Bill Of Exchange

NCERT Solutions For Class 11 Financial Accounting Part I Chapter 8 Bill Of Exchange in this step-by-step answer guide. In some of State Boards and CBSE schools, students are taught thru NCERT books. As the chapter comes to an end, students are requested few questions in an exercising to evaluate their expertise of the chapter. Students regularly want guidance managing those NCERT Solutions.

It’s most effective natural to get stuck withinside the exercises while solving them so that you can assist students score higher marks, we’ve provided step by step NCERT answers for all exercises of Class eleven Accountancy so you can are looking for assist from them. Students should solve those exercises carefully as questions withinside the final exams are requested from those, so these exercises immediately have an impact on students’ final score. Find all NCERT Solutions for Class eleven Accountancy below and prepare in your tests easily.

NCERT Solutions For Class 11 Financial Accounting Part I Chapter 8 Bill Of Exchange

Class 11 Financial Accounting Part I Chapter 8 Bill Of Exchange

Page No 310:

Question 1:

Name any two types of commonly used negotiable instruments.

ANSWER:

The two types of commonly used negotiable instruments are:

1. Cheques

2. Bills of exchange

Page No 310:

Question 2:

Write two points of distinction between bills of exchange and promissory note.

ANSWER:

Basis of Difference

Bills of Exchange

Promissory Note

Drawer

It is drawn by a creditor.

It is drawn by a debtor.

Parties

There are three parties involved, namely drawer, drawee and payee.

There are two parties involved, namely maker and payee.

 

Page No 310:

Question 3:

State any four essential features of bill of exchange.

ANSWER:

The four essential features of bills of exchange are:

1. It must be a written document.

2. It is an unconditional order to pay by the drawer to the drawee.

3. The maker of bill must sign it, without which it will not be a legal proof.

4. The amount to be paid along with its expiry date must be specifically mentioned (both in figures and words) in a bill of exchange.

Page No 310:

Question 4:

State the three parties involved in a bill of exchange.

ANSWER:

The following three parties are involved in a bill of exchange.

1. Drawer who makes the bill

2. Drawee who accepts the bill

3. Payee who receives the payment

Page No 310:

Question 5:

What is meant by maturity of a bill of exchange?

ANSWER:

Maturity of a bill means a date on which the bill is due for payment. Maturity date of the bill differs on the basis of the terms and conditions of the bill. There are three types of bill, viz. after date bill, after sight bill and at sight bill.

1. After date bill: In case of after date bill, the payment of the bill is made on the maturity date of the bill. The maturity date of the bill is ascertained by adding three days of grace period with the specified period of the bill (which starts from the date of drawing). For example, if a bill is drawn on 1st March, 2011 and payable after one month; its maturity date is 4th April. If the maturity date happens to be a gazetted holiday, then the bill is due for payment one day before. However, if the maturity date happens to be a casual holiday, then the bill is due for payment after one day.

2. After sight bill: In case of after sight bill, the payment of the bill is made on the maturity date of the bill. The maturity date of the bill is ascertained by adding three days of grace period with the specified period of the bill (which starts from the date of acceptance by the drawee). For example, if a one month bill is drawn on 1st March, 2011 and is accepted by the drawee on 5th March, 2011; its maturity date is 8th April. In this case, the date of the bill starts from 5th March and not from 1st March. If the maturity date happens to be a gazetted holiday, then the bill is payable one day before. However, if the maturity date happens to be a casual holiday, then the bill is payable after one day.

3. At sight bill: In case of at sight bill, the due date of the bill is considered as and when the bill is presented for payment by the holder of the bill. In this case, there is no grace period. The bill becomes due whenever it is presented for payment.

Page No 310:

Question 6:

What is meant by dishonour of a bill of exchange?

ANSWER:

Dishonour of a bill happens when the acceptor of the bill fails to make the payment on the date of maturity of the bill. Hence, liability of the acceptor is restored. Entries made for recording dishonour of the bill of exchange are reverse of the entries of recording drawing of the bill.

In the books of drawer

Acceptor A/c

Dr.

 

To Bills Receivable A/c

 

(Bill dishonoured)

 

In the books of acceptor/drawee

Bills Payable A/c

Dr.

 

To Drawer A/c

 

(Bill dishonoured)

 

Page No 310:

Question 7:

Name the parties to a promissory note

ANSWER:

The parties to a promissory note are given below.

1. Promissor, who makes the note and undertakes to pay the amount of promissory note.

2. Payee, who receives the payment.

Page No 310:

Question 8:

What is meant by acceptance of a bill of exchange?

ANSWER:

A bill is drawn in favour of a person from whom the amount is due. In other words, a bill of exchange is drawn by the creditors on his/her debtors to make payment of specific amount, on a mentioned date. Generally, a bill is drawn by a seller to a purchaser. Purchaser accepts the bill for the amount due on account of the credit sales. The bill may be accepted for the amount due other than credit purchases, such as commission payable, salary outstanding, etc. A bill cannot come into existence without the acceptance of a debtor.

Page No 310:

Question 9:

What is Noting of a bill of exchange.

ANSWER:

When a bill is presented for payment and acceptor fails to make payment, the bill gets dishonoured. In order to keep a legal proof of dishonour, the bill gets noted by the Notary public (which is approved by the government). In exchange of the Notary service, Notary public charges fees, known as Noting charges. Notary public notes the following facts:

1. Date and amount of the bill

2. Reasons for dishonour

3. Amount of Noting charges

Page No 310:

Question 10:

What is meant by renewal of a bill of exchange?

ANSWER:

When an acceptor of a bill does not have sufficient fund to meet the obligations of the bill on time, he/she requests the drawer for extension (of time) for payment. If the drawer agrees, then a new bill is drawn which is known as renewal of bill. Generally, a bill is renewed on the condition that the drawee has to pay interest for the extended period.

Page No 310:

Question 11:

Give the performa of a Bills Receivable Book.

ANSWER:

Serial Number of Bill

Date Received

Date of Bill

Received From Whom
 

Drawer

Acceptor

Where payable

Term

Due date

Ledger Folio

Amount

Cash Book Folio

Remarks

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Page No 310:

Question 12:

Give the performa of a Bills Payable Book.

ANSWER:

Serial Number of Bill

Date of Bill

Given To Whom
 

Drawer

Payee

Payable Where
 

Term of Bill
 

Due Date

Ledger Folio

Amount Paid

Date

Cash Book Folio

Remarks

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Page No 310:

Question 13:

What is retirement of a bill of exchange?

ANSWER:

When a holder receives the amount of a bill before the maturity date on the request of the acceptor, then it is called retirement of the bill of exchange. Holder of the bill may give discount for such earlier payment. This discount is termed as ‘rebate’.

Entry in the books of the holder of the bill

Cash A/c

Dr.

Rebate A/c

Dr.

 

To Bills Receivable A/c

 

(Bill amount received before maturity and rebate allowed)

 

Entry in the books of the acceptor (drawee) of the bill

Bills Payable A/c

Dr.

 

To Cash A/c

 

 

To Rebate A/c

 

(Bill paid and received rebate for early payment)

 

Page No 310:

Question 14:

Give the meaning of rebate.

ANSWER:

If the drawee expresses his/her wish to pay the bill before the due date to the holder, and if the holder accepts his/her request, then on account of the early payment, the holder may give some discount. This discount is termed as rebate. In other words, rebate is a discount given by the holder to the drawee (or acceptor) for his/her request of early payment of the bill before the due date. It is an expense for the drawer and hence, is debited to the drawer’s books. On the other hand, as it is a gain for the acceptor of bill, so it is credited in the drawee’s books.

Entry in the books of drawer of the bill:

Cash A/c

Dr.

Rebate A/c

Dr.

 

To Bills Receivable A/c

 

(Bill honoured before maturity)

 

Entry in the books of drawee of the bill:

Bills Payable A/c

Dr.

 

To Cash A/c

 

 

To Rebate A/c

 

(Bill paid and rebate received)

 

Page No 310:

Question 15:

Give the performa of a Bill of Exchange.

ANSWER:

Performa of a Bill of exchange is given below.

Mr. X (The Drawer)

Rs 25,000

 

New Delhi

May 01, 2011

Two months after date pay to me or my order, the sum of rupees twenty five thousand only, for value received

Accepted

(Signed)

To

Mr. Z (The Drawee)

May 01, 2011

Tilak Nagar,

New Delhi 110018

 

(Signed)

Mr. X

Janak Puri, New Delhi

110032

 

Page No 310:

Question 1:

A bill of exchange must contain an unconditional promise to pay. Do you agree with a statement?

ANSWER:

According to Negotiable Instrument Act, 1981, “A bill of exchange is defined as an instrument in writing, containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument.”

A bill of exchange contains an unconditional promise to pay a certain sum of money on an agreed date to the drawer or the bearer by the drawee of the bill.

An unconditional order to pay: It is one of the important characteristic of a negotiable instrument. Unconditional order implies no condition should be attached by the acceptor regarding the payment. The conditions like, payment of bill (only in case of profit on sales), payment of bill (only if the prices of goods increase), etc. should not be attached with the bill. Moreover, the language of the bill should not be ambiguous.

Page No 310:

Question 2:

Briefly explain the effects of dishonour and noting of a bill of exchange.

ANSWER:

When a bill is presented for payment and the acceptor fails to make the payment, the bill gets dishonoured. In this situation, liability of the acceptor is restored.

Entry in the books of drawer (if Noting charges are not paid):

Drawee

Dr.

 

To Bills Receivable A/c

 

(Bill dishonoured)

 

Entry in the books of drawee:

Bills Payable A/c

Dr.

 

To Drawer

 

(Bill dishonoured)

 

Noting charges are charged by the notary public for keeping a proof that the bill is dishonoured. The noting charges are paid by the holder of the bill but actually due on the drawee or the acceptor of the bill..

Notary public notes the below given facts.

1. Date and amount of bill

2. Reasons for dishonour

3. Amount of noting charges

Effect of Noting charges in the books of holder of bill (if Noting charges are paid):

Drawee

Dr.

 

To Bills Receivable A/c

 

 

To Cash A/c (Noting charges)

 

(Bill dishonoured and Noting charges paid)

 

In the books of drawee:

Bills Payable A/c

Dr.

Noting charges A/c

Dr.

 

To Drawer

 

(Bill dishonoured and Noting charges due)

 

Page No 310:

Question 3:

Explain briefly the procedure of calculating the date of maturity of a bill of exchange? Give example.

ANSWER:

The procedure to calculate the date of maturity of a bill of exchange is given below.

1. Ascertain the date on which the bill will be honoured.

2. Add three days of grace to the above date.

For example, a bill with maturity period of one month is drawn on 1st July and due date is 1st September. Then add 3 days of grace and payment will be made on 4th September.

Days of grace depend on the following situations:

1. Declared holidays: If the payment day happens to be a national holiday or Sunday, then the preceding day becomes the payment day.

For example,

  1. If a bill is drawn on 12th July and its due date is 12th August, then after adding 3 days of grace the maturity day is 15th August. However, as 15th August is a national holiday; so, 14th August becomes the payment day.
  2. If a bill is drawn on 1st May and the maturity period is of one month, then the due date is 1st June. After adding 3 days of grace, the payment date becomes 4th June. However, if 4th June happens to be a Sunday, then the payment will be made on 3rd June.

2. Undeclared holidays: If the payment day happens to be an emergency holiday, then the succeeding day becomes the payment day. For example, if a bill is drawn on 1st May and is payable after 15 days, then, after adding 3 days of grace period, the due date becomes 18th May. However, if a national strike is declared on 18th May, then 19th May becomes the due date of the bill.

Page No 310:

Question 4:

Distinguish between bill of exchange and promissory note.

ANSWER:

Basis of Difference

Bills of Exchange

Promissory Note

Order or promise

It is an order to pay.

It is a promise to pay.

Parties

There are three parties involved, drawer, acceptor and payee.

There are two parties involved, maker and payee.

Drawer

It is drawn by the creditor.

It is drawn by the debtors.

Acceptance

It needs acceptance by the drawee.

As it is prepared by promissor, so no acceptance is required.

Payee

Drawer and payee may be the same.

Promissor cannot be the payee.

Noting

In case of dishonour of the bill, the bill may get noted.

Noting is not necessary.

Liability

Drawer is not primarily liable.

Promissor is the primarily liable.

 

 

Page No 310:

Question 5:

Briefly explain the purpose and benefits of retiring a bill of exchange to the debtor and the creditor.

ANSWER:

When a holder receives the amount of a bill before the maturity date on request of the acceptor, it is called retirement of the bill of exchange. Holder of the bill may give discount for such earlier payment. This discount is termed as ‘rebate’.

Rebate is given by the holder to the acceptor of the bill on account of payment before the due date. Rebate is a loss for the holder of the bill; so, it is debited in the books of the holder when payment is received.

Cash A/c

Dr.

Rebate A/c

Dr.

 

To Bills Receivable A/c

 

(Payment received and rebate allowed for early payment)

 

Acceptor of the bill gets rebate for the payment made before the due date. The rebate is a gain for the drawee; so, it is credited in the books of the drawee.

Bills Payable A/c

Dr.

 

To Cash A/c

 

 

To Rebate A/c

 

(Bill paid before the due date and rebate received for early payment)

 

Page No 310:

Question 6:

Explain briefly the purpose and advantages of maintaining of a Bills Receivable Book.

ANSWER:

Bills Receivable Book is a special purpose book that is maintained to keep records of bills received from the debtors. It contains details such as acceptor’s name, date of bill, due date, amount, etc. for future references. It is totalled periodically and its balance is transferred to the debit side of the bills receivable account.

Benefits of Maintaining the Bill Receivable Book

1. Availability of information: All the information related to the bills receivable, such as amount, due date, etc., are recorded at one place and hence are easily accessible.

2. Possibility of fraud: Since all the bills are recorded at one place, possibility of fraud is minimised.

3. Responsibility: The person who maintains the bills receivable book will also be responsible for any errors or omissions. Therefore, higher degree of accountability and responsibility exists. Also, if any error is detected, then it can be fixed quickly.

4. Time efficient: Recording of bills receivable through the bills receivable book takes lesser time than that of journal entry. Therefore, it saves time of the accountant in recording numerous transactions of repetitive and routine nature.

Page No 310:

Question 7:

Briefly explain the benefits of maintaining a Bills Payable Book and state how is its posting is done in the ledger?

ANSWER:

A Bills Payable Book is a special purpose book, maintained to keep records of acceptance of bills, given to the creditors. It contains details of the amount, date of bill, due date, to whom acceptance is given, etc., for future references. It is totalled periodically and its balance is transferred to the credit side of the bills payable account.

Benefits of Maintaining Bills Payable Book

1. Availability of information: All the information related to the bills payable are recorded at one place, such as the amount, due date, etc.

2. Possibility of fraud: Since all the bills are recorded at one place, possibility of fraud is minimised.

3. Responsibility: All the transactions are recorded by the same person. Therefore, errors can be easily detected and rectified. This leads to a higher degree of responsibility and accountability of the accountant.

Page No 310:

Question 1:

On Jan 01, 2016 Rao sold goods Rs 10,000 to Reddy. Half of the payment was made immediately and for the remaining half Rao drew a bill of exchange upon Reddy payable after 30 days. Reddy accepted the bill and returned it to Rao. On the due date Rao presented the bill to Reddy and received the payment Journalise the above transactions in the books Rao and prepare of Rao’s account in the books of Reddy.

 

 

ANSWER:

Books of Rao

Journal 

Date

 

Particulars

 

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

2016

 

 

 

 

 

 

Jan.01

Reddy

Dr.

 

10,000

 

 

 

To Sales A/c

 

 

 

10,000

 

(Goods sold to Reddy)

 

 

 

 

 

 

 

 

 

 

Jan.01

Cash A/c

Dr.

 

5,000

 

 

 

To Reddy

 

 

 

5,000

 

(Cash received from Reddy)

 

 

 

 

 

 

 

 

 

 

Jan.01

Bills Receivable A/c

Dr.

 

5,000

 

 

 

To Reddy

 

 

 

5,000

 

(Bill received for 30 days accepted by Reddy)

 

 

 

 

 

 

 

 

 

 

 

Feb.03

Cash A/c

Dr.

 

5,000

 

 

 

To Bills Receivable A/c

 

 

 

5,000

 

(Reddy’s acceptance met on due date)

 

 

 

 

 

 

 

 

 

 

 

Books of Reddy

Rao’sAccount

Dr.

 

 

 

 

 

 

Cr.

Date

Particulars

J.F.

Amount

Rs

Date

Particulars

J.F.

Amount

Rs

Jan.01

Cash

 

5,000

2011

 

 

 

Jan.01

Bills Receivable

 

5,000

Jan.01

Purchases

 

10,000

 

 

 

 

 

 

 

 

 

 

 

10,000

 

 

 

10,000

 

 

 

 

 

 

 

 

 

 



Page No 311:

Question 2:

On Jan 01,2016, Shankar purchased goods from Parvati for Rs 8,000 and immediately drew a promissory note in favour of Parvati payable after 3 months. On the date of maturity of the promissory note, the Government of India declared holiday under the Negotiable Instrument Act 1881. Since, Parvati was unaware about the provision of the law regarding the date of maturity of the bill, she handed over the bill to her lawyer, who duly presented the bill and received the payment. The amount of the bill was handed over by the lawyer to Parvati immediately. Record the necessary Journal entries in the books of Parvati and Shankar.

 

 

ANSWER:

Books of Parvati

 Journal

Date

 

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

2016

 

 

 

 

 

 

Jan.01

Shankar

Dr.

 

8,000

 

 

 

To Sales A/c

 

 

 

8,000

 

(Goods sold to Shankar)

 

 

 

 

 

 

 

 

 

 

Jan.01

Bills Receivable A/c

Dr.

 

8,000

 

 

 

To Shankar

 

 

 

8,000

 

(Promissory Note received from Shankar for

three months)

 

 

 

 

 

 

 

 

 

 

Apr.05

Cash A/c

Dr.

 

8,000

 

 

 

To Bills Receivable A/c

 

 

 

8,000

 

(Cash received for Promissory Note one day after the

maturity date on account of holiday declared by Govt.)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Books of Shankar

Journal 

Date

 

Particulars

 

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

2016

 

 

 

 

 

 

Jan.01

Purchases A/c

Dr.

 

8,000

 

 

 

To Parvati

 

 

 

8,000

 

(Goods purchased from Parvati)

 

 

 

 

 

 

 

 

 

 

Jan.01

Parvati

Dr.

 

8,000

 

 

 

To Bills Payable A/c

 

 

 

8,000

 

(Promissory note for three months sent to Parvati)

 

 

 

 

 

 

 

 

 

 

Apr.5

Bills Payable A/c

Dr.

 

8,000

 

 

 

To Cash A/c

 

 

 

8,000

 

(Cash paid on maturity of promissory note)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note: Here, it has been assumed holiday on Apr.04, 2016 is emergency holiday if it had gazetted holiday, the Promissory Note should have been discharged on Apr.05, 2011.

 

Page No 311:

Question 3:

Vishal sold goods for Rs 7,000 to Manju on Jan 05, 2016 and drew upon her a bill of exchange payable after 2 months. Manju accepted Vishal’s draft and handed over the same to Vishal after acceptance. Vishal immediately discounted the bill with his bank@12% p.a. On the due date Manju met her acceptance. Journalise the above transactions in the books of Vishal and Manju.

 

 

ANSWER:

Books of Vishal 

Journal

Date

 

Particulars

 

L.F.

Debit

Amount 

Rs

Credit 

Amount 

Rs

2016

 

 

 

 

 

 

Jan.05

Manju

Dr.

 

7,000

 

 

 

To Sales A/c

 

 

 

7,000

 

(Goods sold to Manju)

 

 

 

 

 

 

 

 

 

 

Jan.05

Bills Receivable A/c

Dr.

 

7,000

 

 

 

To Manju

 

 

 

7,000

 

(Manju’s acceptance received for two months)

 

 

 

 

 

 

 

 

 

 

Jan.05

Bank A/c

Dr.

 

6,860

 

 

Discount A/c

Dr.

 

140

7,000

 

 

To Bills Receivable A/c

 

 

 

 

 

(Bill Receivable discounted with the bank @ 12 % p.a. for two months)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Books of Manju 

Journal

Date

 

Particulars

 

L.F.

Debit 

Amount

Rs

Credit

Amount

Rs

2016

 

 

 

 

 

 

Jan.05

Purchases A/c

Dr.

 

7,000

 

 

 

To Vishal

 

 

 

7,000

 

(Goods purchased from Vishal)

 

 

 

 

 

 

 

 

 

 

Jan.05

Vishal

Dr.

 

7,000

 

 

 

To Bills Payable A/c

 

 

 

7,000

 

(Bill drawn by Vishal accepted)

 

 

 

 

 

 

 

 

 

 

Mar.08

Bills Payable A/c

Dr.

 

7,000

 

 

 

To Bank A/c

 

 

 

7,000

 

(Amount of Bill Payable paid to bank on maturity)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Page No 311:

Question 4:

On Feb 01, 2016, John purchased goods for Rs 15,000 from Jimmi. He immediately made a payment of Rs 5,000 by cheque and for the balance accepted the bill of exchange drawn upon him by Jimmi. The bill of exchange was payable after 40 days. Five days before the maturity of the bill, Jimmi sent the same to his bank for collection. The bank duly presented the bill to John on the due date who met the bill. The bank informed the same to Jimmi. Prepare John’s account in the books of Jimmi and Jimmi account in the books of John.

 ANSWER:

Books of Jimmi

Journal

Date

 

Particulars

 

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

2016

 

 

 

 

 

 

Feb.01

John

Dr.

 

15,000

 

 

 

To Sales A/c

 

 

 

15,000

 

(Goods sold to John)

 

 

 

 

 

 

 

 

 

 

Feb.01

Bank A/c

Dr.

 

5,000

 

 

 

To John

 

 

 

5,000

 

(Cheque received for Rs 5,000 from John)

 

 

 

 

 

 

 

 

 

 

 

Feb.01

Bills Receivable A/c

Dr.

 

10,000

 

 

 

To John

 

 

 

10,000

 

(Bill received from John for 40 days)

 

 

 

 

 

 

 

 

 

 

 

Mar.10

Bill Sent for Collection A/c

Dr.

 

10,000

 

 

 

To Bills Receivable A/c

 

 

 

10,000

 

(John’s acceptance sent to bank for collection)

 

 

 

 

 

 

 

 

 

 

 

Mar.15

Bank A/c

Dr.

 

10,000

 

 

 

To Bill Sent for Collection A/c

 

 

 

10,000

 

(John’s acceptance met on due date and bank

received the payment)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ledger 

John’s Account

Dr.

 

 

 

 

 

 

Cr.

Date

Particulars

J.F.

Amount Rs

Date

Particulars

J.F.

Amount Rs

2016

 

 

 

2016

 

 

 

Feb.01

Sales

 

15,000

Feb.01

Bank

 

5,000

 

 

 

 

Feb.01

Bills Receivable

 

10,000

 

 

 

 

 

 

 

 

 

 

 

15,000

 

 

 

15,000

 

 

 

 

 

 

 

 

 

Books of John

Journal

Date

 

Particulars

 

L.F.

Debit 

Amount 

Rs

Credit

Amount

Rs

2016

 

 

 

 

 

 

Feb.01

Purchases A/c

Dr.

 

15,000

 

 

 

To Jimmi

 

 

 

15,000

 

(Goods purchased from Jimmi)

 

 

 

 

 

 

 

 

 

 

Feb.01

Jimmi

Dr.

 

5,000

 

 

 

To Bank A/c

 

 

 

5,000

 

(Cheque paid to Jimmi)

 

 

 

 

 

 

 

 

 

 

Feb.01

Jimmi

Dr.

 

10,000

 

 

 

To Bills Payable A/c

 

 

 

10,000

 

(Bill drawn by Jimmi accepted for 40 days)

 

 

 

 

 

 

 

 

 

 

 

Mar.15

Bills Payable A/c

Dr.

 

10,000

 

 

 

To Bank A/c

 

 

 

10,000

 

(Payment of bill made on maturity to bank)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ledger 

Jimmi’s Account

Dr.

 

 

 

 

 

 

Cr.

Date

Particulars

J.F.

Amount Rs

Date

Particulars

J.F.

Amount Rs

2016

 

 

 

2016

 

 

 

Feb.01

Bank

 

5,000

Feb.01

Purchases

 

15,000

Feb.01

Bills Payable

 

10,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15,000

 

 

 

15,000

 

 

 

 

 

 

 

 

 

 

Page No 311:

Question 5:

On Jan 15, 2015, Kartar Sold goods for Rs 30,000 to Bhagwan and drew upon him three bills of exchanges of Rs 10,000 each payable after one month, two month, and three months respectively. The first bill was retained by Kartar till its maturity. The second bill was endorsed by him in favour of his creditor Ratna and the third bill was discounted by him immediately @ 6% p.a. All the bills were met by Bhagwan. Journalise the above transactions in the books of Kartar and Bhagwan. Also prepare ledger accounts in books of Kartar and Bhagwan.

 

 

ANSWER:

Journal Entries in the Books of Kartar

Date

 

Particulars

 

L.F.

Debit 

Amount 

Rs

Credit 

Amount 

Rs

2015

 

 

 

 

 

 

Jan.15

Bhagwan

Dr.

 

30,000

 

 

 

To Sales A/c

 

 

 

30,000

 

(Goods sold to Bhagwan)

 

 

 

 

 

 

 

 

 

 

Jan.15

Bills Receivable A/c

Dr.

 

10,000

 

 

 

To Bhagwan

 

 

 

10,000

 

(Three bills of Rs 10,000 each, received from

Bhagwan–first bill for one month, second bill

for two months and third bill for three months)

 

 

 

 

 

 

 

 

 

 

Jan.15

Ratna

Dr.

 

10,000

 

 

 

To Bills Receivable A/c

 

 

 

10,000

 

(Second bill endorsed to Ratna)

 

 

 

 

 

 

 

 

 

 

 

Jan.15

Bank A/c

Dr.

 

9,850

 

 

Discount A/c

Dr.

 

150

 

 

 

To Bills Receivable A/c

 

 

 

10,000

 

 

(B/R discounted)

 

 

 

 

Feb.19

Cash A/c

Dr.

 

10,000

 

 

 

To Bills Receivable A/c

 

 

 

10,000

 

(First bill for one month met by Bhagwan, on due date)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bhagwan’s Account

Dr.

 

Cr.

Date

Particulars

J.F.

Amount

(Rs)

Date

Particulars

J.F.

Amount

(Rs)

2015

 

 

 

2015

 

 

 

Jan. 15

Sales A/c

 

30,000

Jan. 15

Bills Receivable A/c

 

30,000

 

 

 

30,000

 

 

 

30,000

 

 

 

 

 

 

 

 

Ratna’s Account

Dr.

 

Cr.

Date

Particulars

J.F.

Amount

(Rs)

Date

Particulars

J.F.

Amount

(Rs)

2015

 

 

 

2015

 

 

 

Jan. 15

Bills Receivable A/c

 

10,000

Jan. 15

Balance b/d

 

10,000

 

 

 

10,000

 

 

 

10,000

 

 

 

 

 

 

 

 

Bills Receivable Account

Dr.

 

Cr.

Date

Particulars

J.F.

Amount

(Rs)

Date

Particulars

J.F.

Amount

(Rs)

2015

 

 

 

2015

 

 

 

Jan. 15

Bhagwan

 

30,000

Jan. 15

Ratna

 

10,000

 

 

 

 

Jan. 15

Bank A/c

 

9,850

 

 

 

 

Jan. 15

Discount A/c

 

150

 

 

 

 

Feb. 19

Cash

 

10,000

 

 

 

30,000

 

 

 

30,000

 

 

 

 

 

 

 

 

Cash Account

Dr.

 

Cr.

Date

Particulars

J.F.

Amount

(Rs)

Date

Particulars

J.F.

Amount

(Rs)

2015

 

 

 

2015

 

 

 

Feb. 19

Bills Receivable

 

10,000

Feb. 19

Balance c/d

 

10,000

 

 

 

10,000

 

 

 

10,000

 

 

 

 

 

 

 

 

Bank’s Account

Dr.

 

Cr.

Date

Particulars

J.F.

Amount

(Rs)

Date

Particulars

J.F.

Amount

(Rs)

2015

 

 

 

2015

 

 

 

Jan. 15

Bills Receivable

 

9,850

Jan. 15

Balance c/d

 

9,850

 

 

 

9,850

 

 

 

9,850

 

 

 

 

 

 

 

 

 

Journal Entries in the Books of Bhagwan

Date

 

Particulars

 

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

2015

 

 

 

 

 

 

Jan.15

Purchases A/c

Dr.

 

30,000

 

 

 

To Kartar

 

 

 

30,000

 

(Good purchased from Kartar on credit)

 

 

 

 

 

 

 

 

 

 

Jan.15

Kartar

Dr.

 

30,000

 

 

 

To Bills Payable A/c

 

 

 

30,000

 

(Three bill Rs 10,000 each drawn by Kartar–

The first bill for one month, the second bill for two months

and the third bill for three months, accepted and

 returned them to Kartar)

 

 

 

 

 

 

 

 

 

Feb.19

Bills Payable A/c

Dr.

 

10,000

 

 

 

To Cash A/c

 

 

 

10,000

 

(First bill was paid on due date)

 

 

 

 

 

 

 

 

 

 

 

Mar.19

Bills Payable A/c

Dr.

 

10,000

 

 

 

To Bank A/c

 

 

 

10,000 

 

(Second bill was paid on due date to Ratna)

 

 

 

 

 

 

 

 

 

 

 

Apr.19

Bills Payable A/c

Dr.

 

10,000

 

 

 

To Bank A/c

 

 

 

10,000

 

(Third bill was paid on due date to bank)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Kartar’s Account

Dr.

 

Cr.

Date

Particulars

J.F.

Amount

(Rs)

Date

Particulars

J.F.

Amount

(Rs)

2015

 

 

 

2015

 

 

 

Jan. 15

Bills Payable A/c

 

30,000

Jan. 15

Purchases

 

30,000

 

 

 

30,000

 

 

 

30,000

 

 

 

 

 

 

 

 

 

Bills Payable Account

Dr.

 

Cr.

Date

Particulars

J.F.

Amount

(Rs)

Date

Particulars

J.F.

Amount

(Rs)

2015

 

 

 

2015

 

 

 

Feb. 19

Cash A/c

 

10,000

Jan. 15

Kartar

 

30,000

Mar. 19

Bank A/c

 

10,000

 

 

 

 

Apr. 19

Bank A/c

 

10,000

 

 

 

 

 

 

 

30,000

 

 

 

30,000

 

 

 

 

 

 

 

 

 

Cash Account

Dr.

 

Cr.

Date

Particulars

J.F.

Amount

(Rs)

Date

Particulars

J.F.

Amount

(Rs)

2015

 

 

 

2015

 

 

 

Feb. 19

Balance b/d

 

10,000

Feb. 19

Bills Payable A/c

 

10,000

 

 

 

10,000

 

 

 

10,000

 

 

 

 

 

 

 

 

 

Bank’s Account

Dr.

 

Cr.

Date

Particulars

J.F.

Amount

(Rs)

Date

Particulars

J.F.

Amount

(Rs)

2015

 

 

 

2015

 

 

 

Mar. 15

Balance b/d

 

20,000

Mar. 19

Bills Payable A/c

 

10,000

 

 

 

 

Apr. 19

Bills Payable A/c

 

10,000

 

 

 

 

 

 

 

 

 

 

 

20,000

 

 

 

20,000

 

 

 

 

 

 

 

 

 

 

 

Page No 311:

Question 6:

On Jan. 01, 2016 Arun sold goods for Rs 30,000 to Sunil. 50% of the payment was made immediately by Sunil on which Arun allowed a cash discount of 2%. For the balance Sunil drew a promissory note in favour of Arun payable after 20 days. Since, the date of maturity of bill was a public holiday, Arun presented the bill on a day, as per the provisions of Negotiable Instrument Act which was met by Sunil. State the date on which the bill was presented by Arun for payment and Journalise the above transactions in the books of Arun and Sunil.

 

 

ANSWER:

Journal Entries in the Books of Arun

Date

 

Particulars

 

L.F.

Debit 

Amount 

Rs

Credit 

Amount 

Rs

2016

 

 

 

 

 

 

Jan.01

Sunil

Dr.

 

30,000

 

 

 

To Sales A/c

 

 

 

30,000

 

(Goods sold to Sunil)

 

 

 

 

 

 

 

 

 

 

Jan.01

Cash A/c

Dr.

 

14,700

 

 

Discount Allowed A/c

Dr.

 

300

 

 

 

To Sunil

 

 

 

15,000

 

(Half of the amount due from Sunil was received and

 allowed him 2% Cash Discount)

 

 

 

 

 

 

 

 

 

Jan.01

Bills Receivable A/c

Dr.

 

15,000

 

 

 

To Sunil

 

 

 

15,000

 

(Promissory note received for 20 days from Sunil

 for balance amount due from Sunil)

 

 

 

 

 

 

 

 

 

 

Jan.23

Cash A/c

Dr.

 

15,000

 

 

 

To Bills Receivable A/c

 

 

 

15,000 

 

(Cash received from Sunil for B/R one day before

 maturity, as per negotiable instrument act, if the

date of maturity is holiday, negotiable instrument

 will be met one day before maturity)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note: Date of maturity of the promissory note is Jan. 24, 2016, on account of holiday, it will be presented one day earlier that is on Jan. 23, 2016.

 

Journal Entries in the Book of Sunil

Date

 

Particulars

 

L.F.

Debit Amount Rs

Credit Amount Rs

2016

 

 

 

 

 

 

Jan.01

Purchases A/c

Dr.

 

30,000

 

 

 

To Arun

 

 

 

30,000

 

(Goods purchased from Arun)

 

 

 

 

 

 

 

 

 

 

Jan.01

Arun

Dr.

 

15,000

 

 

 

To Cash A/c

 

 

 

14,700

 

 

To Discount Received A/c

 

 

 

300

 

(Half amount due to Arun paid by cheque and 2%  discount allowed by him)

 

 

 

 

 

 

 

 

 

Jan.01

Arun

Dr.

 

15,000

 

 

 

To Bills Payable A/c

 

 

 

15,000

 

(Promissory note issued in favour of Arun for twenty days)

 

 

 

 

 

 

 

 

 

 

 

Jan.23

Bills Payable A/c

Dr.

 

15,000

 

 

 

To Cash A/c

 

 

 

15,000

 

(Promissory note met one day before the maturity day)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Page No 311:

Question 7:

Darshan sold goods for Rs 40,000 to Varun on 8.1.2016 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 immediately discounted the bill @ 6% p.a. with his bank.

·         When the bill was endorsed immediately 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.

 

 

ANSWER:

Case (i): When the bill was retained by Darshan till the date of its maturity

 

Journal Entries in the Books of Darshan

Date

 

Particulars

 

L.F.

Debit 

Amount 

Rs

Credit 

Amount 

Rs

2016

 

 

 

 

 

 

Jan.08

Varun

Dr.

 

40,000

 

 

 

To Sales A/c

 

 

 

40,000

 

(Goods sold to Varun)

 

 

 

 

 

 

 

 

 

 

Jan.08

Bills Receivable A/c

Dr.

 

40,000

 

 

 

To Varun

 

 

 

40,000

 

(Varun’s acceptance received for two months)

 

 

 

 

 

 

 

 

 

 

 

Mar.11

Cash A/c

Dr.

 

40,000

 

 

 

To Bills Receivable A/c

 

 

 

40,000

 

(Payment for B/R received for B/R)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Journal Entries in the Books of Varun

Date

 

Particulars

 

L.F

Debit Amount Rs

Credit Amount Rs

2016

 

 

 

 

 

 

Jan.08

Purchases A/c

Dr.

 

40,000

 

 

 

To Darshan

 

 

 

40,000

 

(Goods bought from Darshan)

 

 

 

 

 

 

 

 

 

 

Jan.08

Darshan

Dr.

 

40,000

 

 

 

To Bills Payable A/c

 

 

 

40,000

 

(Bill of two months accepted for Darshan)

 

 

 

 

 

 

 

 

 

Mar.11

Bills Payable A/c

Dr.

 

40,000

 

 

 

To Cash A/c

 

 

 

40,000

 

(Varun cleared his acceptance on the due date)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Case (ii): When Darshan immediately discounted the bill @ 6% p.a. with the bank.

 

Journal Entries in the Books of Darshan

 

Date

 

Particulars

 

L.F.

Debit 

Amount 

Rs

Credit 

Amount 

Rs

2016

 

 

 

 

 

 

Jan.08

Varun

Dr.

 

40,000

 

 

 

To Sales A/c

 

 

 

40,000

 

(Goods sold to Varun)

 

 

 

 

 

 

 

 

 

 

Jan.08

Bills Receivable A/c

Dr.

 

40,000

 

 

 

To Varun

 

 

 

40,000

 

(B/R received from Varun for two months)

 

 

 

 

 

 

 

 

 

 

 

Jan.08

Bank A/c

Dr.

 

39,600

 

 

Discount A/c

Dr.

 

400

 

 

 

To Bills Receivable A/c

 

 

 

40,000

 

(B/R discounted from bank @ 6 p.a.)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Journal Entries in the Books of Varun

Date

 

Particulars

 

L.F.

Debit Amount Rs

Credit Amount Rs

2016

 

 

 

 

 

 

Jan.08

Purchases A/c

Dr.

 

40,000

 

 

 

To Darshan

 

 

 

40,000

 

(Goods bought from Darshan)

 

 

 

 

 

 

 

 

 

 

Jan.08

Darshan

Dr.

 

40,000

 

 

 

To Bills Payable A/c

 

 

 

40,000

 

(Bill of two months accepted for Darshan)

 

 

 

 

 

 

 

 

 

Mar.11

Bills Payable A/c

Dr.

 

40,000

 

 

 

To Bank A/c

 

 

 

40,000

 

(Varun cleared his acceptance on the

due date)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Case (iii): When the bill was endorsed immediately by Darshan in favour of his creditor Suresh.

 

Journal Entries in the Books of Darshan

Date

 

Particulars

 

L.F.

Debit 

Amount 

Rs

Credit 

Amount 

Rs

2016

 

 

 

 

 

 

Jan.08

Varun

Dr.

 

40,000

 

 

 

To Sales A/c

 

 

 

40,000

 

(Goods sold to Varun)

 

 

 

 

 

 

 

 

 

 

Jan.08

Bills Receivable A/c

Dr.

 

40,000

 

 

 

To Varun A/c

 

 

 

40,000

 

(Varun’s acceptance received for two months)

 

 

 

 

 

 

 

 

 

 

 

Jan.08

Suresh A/c

Dr.

 

40,000

 

 

 

To Bills Receivable A/c

 

 

 

40,000

 

(Varun’s acceptance endorsed in favour of Suresh)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Journal Entries in the Books of Varun

Date

 

Particulars

 

L.F

Debit Amount Rs

Credit Amount Rs

2016

 

 

 

 

 

 

Jan.08

Purchases A/c

Dr.

 

40,000

 

 

 

To Darshan

 

 

 

40,000

 

(Goods bought from Darshan)

 

 

 

 

 

 

 

 

 

 

Jan.08

Darshan

Dr.

 

40,000

 

 

 

To Bills Payable A/c

 

 

 

40,000

 

(Bill drawn by Darshan accepted for two months)

 

 

 

 

 

 

 

 

 

Mar.11

Bills Payable A/c

Dr.

 

40,000

 

 

 

To Cash A/c

 

 

 

40,000

 

(Bill paid to the holder of bill)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Case (iv): When three days before its maturity, the bill, as sent by Darshan to his bank for Collection.

 

Journal Entries in the Books of Darshan

Date

 

Particulars

 

L.F.

Debit 

Amount 

Rs

Credit 

Amount 

Rs

2016

 

 

 

 

 

 

Jan.08

Varun A/c

Dr.

 

40,000

 

 

 

To Sales A/c

 

 

 

40,000

 

(Goods sold to Varun)

 

 

 

 

 

 

 

 

 

 

Jan.08

Bills Receivable A/c

Dr.

 

40,000

 

 

 

To Varun A/c

 

 

 

40,000

 

(Varun’s acceptance received for two months)

 

 

 

 

 

 

 

 

 

 

 

Mar.08

Bill Sent for Collection A/c

Dr.

 

40,000

 

 

 

To Bills Receivable A/c

 

 

 

40,000

 

(Bill sent for collection sent to the bank)

 

 

 

 

 

 

 

 

 

 

 

Mar.11

Bank A/c

Dr.

 

40,000

 

 

 

To Bill Sent for Collection

 

 

 

40,000

 

(Bill amount was met)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Journal Entries in the Books of Varun

Date

 

Particulars

 

L.F.

Debit 

Amount 

Rs

Credit 

Amount 

Rs

2016

 

 

 

 

 

 

Jan.08

Purchases A/c

Dr.

 

40,000

 

 

 

To Darshan

 

 

 

40,000

 

(Goods bought from Darshan)

 

 

 

 

 

 

 

 

 

 

Jan.08

Darshan

Dr.

 

40,000

 

 

 

To Bills Payable A/c

 

 

 

40,000

 

(Bill drawn by Darshan accepted for two

 months)

 

 

 

 

 

 

 

 

 

Mar.11

Bills Payable A/c

Dr.

 

40,000

 

 

 

To Bank A/c

 

 

 

40,000

 

(Bill paid to the bank)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Page No 312:

Question 8:

Bansal Traders allow a trade discount of 10% on the list price of the goods purchased from them. Mohan traders, who runs a retail shop made the following purchases from Bansal Traders.

Date

Amount

Rs

Dec.21, 2016

1,000

Dec.26, 2016

1,200

Dec.18, 2016

2,000

Dec.31, 2016

5,000


For all the purchases Mohan Traders drew promissory note in favour of Bansal Traders payable after 30 days. The promissory note for the sale of Dec. 21, 2016 was retained by Bansal Traders with them till the date of its maturity. The promissory note drawn on 26.12.2016 was discounted by Bansal Traders from their bank at 12% p.a. The promissory note drawn on Dec. 28, 2016 was endorsed by Bansal Traders in favour of their creditor Dream Soaps in full settlement of a purchase amounting to Rs 1,900. On 25.1.2017 Bansal Traders sent the promissory note drawn on Dec. 31, 2016 to their bank for collection. All the promissory notes were met by Mohan Traders. Record the necessary journal entries for the above transactions in the books of Bansal Traders and Mohan Traders and prepare Mohan Traders account in the books of Bansal Traders and Bansal Traders account in the books of Mohan Traders.

ANSWER:

Journal Entries in the Books of Bansal Traders

Date

 

Particulars

 

L.F.

Debit Amount Rs

Credit Amount Rs

2016

 

 

 

 

 

 

Dec.21

Mohan Traders

Dr.

 

900

 

 

 

To Sales A/c

 

 

 

900

 

(Goods sold to Mohan Traders list price Rs

1,000 at 10% trade discount)

 

 

 

 

 

 

 

 

 

2016

 

 

 

 

 

 

Dec.21

Bills Receivable A/c

Dr.

 

900

 

 

 

To Mohan Traders

 

 

 

900

 

(Promissory note received from Mohan Traders

 payable after 30 days)

 

 

 

 

 

 

 

 

 

 

2016

 

 

 

 

 

 

Dec.26

Mohan Traders

Dr.

 

1,080

 

 

 

To Sales A/c

 

 

 

1,080

 

(Goods sold to Mohan Traders list price Rs

 1,200 at 10% trade discount)

 

 

 

 

 

 

 

 

 

 

2016

 

 

 

 

 

 

Dec.26

Bills Receivable A/c

Dr.

 

1,080

 

 

 

To Mohan Traders

 

 

 

1,080

 

(Promissory note  received from Mohan Traders)

 

 

 

 

 

 

 

 

 

 

2016

 

 

 

 

 

 

Dec.26

Bank A/c

Dr.

 

1,071

 

 

Discount A/c

Dr.

 

9

 

 

 

To Bills Receivable A/c

 

 

 

1,080

 

(Promissory note discounted from the Bank)

 

 

 

 

 

 

 

 

 

 

 

2016

 

 

 

 

 

 

Dec.28

Mohan Traders A/c

Dr.

 

1,800

 

 

 

To Sales A/c

 

 

 

1,800

 

(Goods sold to Mohan Traders list price Rs

2,000 at 10% trade discount)

 

 

 

 

 

 

 

 

 

 

2016

 

 

 

 

 

 

Dec.28

Bills Receivable A/c

Dr.

 

1,800

 

 

 

To Mohan Traders A/c

 

 

 

1,800

 

(Promissory note received from Mohan Traders)

 

 

 

 

 

 

 

 

 

 

2016

 

 

 

 

 

 

Dec.28

Dream Soaps A/c

Dr.

 

1,900

 

 

 

To Bills Receivable A/c

 

 

 

1,800

 

 

To Discount Received A/c

 

 

 

100

 

(Promissory note of Rs 1,800 sent to Dream

 Soap in full settlement of amount due to him)

 

 

 

 

 

 

 

 

 

 

2016

 

 

 

 

 

 

Dec.31

Mohan Traders

Dr.

 

4,500

 

 

 

To Sales A/c

 

 

 

4,500

 

(Goods sold to Mohan trades list price Rs

5,000 at 10% trade discount)

 

 

 

 

 

 

 

 

 

 

2016

 

 

 

 

 

 

Dec.31

Bills Receivable A/c

Dr.

 

4,500

 

 

 

To Mohan Traders

 

 

 

4,500

 

(Promissory note received from Mohan Traders for 30 days)

 

 

 

 

 

 

 

 

 

 

 

2017

 

 

 

 

 

 

Jan.23

Cash A/c

Dr.

 

900

 

 

 

To Bills Receivable A/c

 

 

 

900

 

(Promissory note issued on Dec. 21,  

2005 was met on maturity)

 

 

 

 

 

 

 

 

 

 

2017

 

 

 

 

 

 

Jan.25

Bill Sent for collection A/c

Dr.

 

4,500

 

 

 

To Bills Receivable A/c

 

 

 

4,500

 

(Promissory note issued on Dec. 31, 2005

 sent for collection to bank)

 

 

 

 

 

 

 

 

 

 

 

2017

 

 

 

 

 

 

Feb.02

Bank A/c

Dr.

 

4,500

 

 

 

To Bill Sent for Collection A/c

 

 

 

4,500

 

(Bank got payment of bill sent for collection

 on due date)

 

 

 

 

 

 

 

 

 

 

 

In the books of Bansal Traders

Mohan Trader’s Account

Dr.

 

 

 

 

 

 

Cr.

Date

Particulars

J.F.

Amount

Rs

Date

Particulars

J.F.

Amount

Rs

2016

 

 

 

2016

 

 

 

Dec.21

Sales

 

900

Dec.21

Bills Receivable

 

900

Dec.26

Sales

 

1,080

Dec.26

Bills Receivable

 

1,080

Dec.28

Sales

 

1,800

Dec.28

Bills Receivable

 

1,800

Dec.31

Sales

 

4,500

Dec.31

Bills Receivable

 

4,500

 

 

 

8,280

 

 

 

8,280

 

 

 

 

 

 

 

 

 

Journal Entries in the Books of Mohan Trader’s

 

Date

 

Particulars

 

L.F.

Debit Amount Rs

Credit Amount Rs

2016

 

 

 

 

 

 

Dec.21

Purchases A/c

Dr.

 

900

 

 

 

To Bansal Traders

 

 

 

900

 

(Goods bought from Bansal Trader’s list price Rs

 1,000 at 10% trade discount)

 

 

 

 

 

 

 

 

 

2016

 

 

 

 

 

 

Dec.21

Bansal Trader

Dr.

 

900

 

 

 

To Bills Payable A/c

 

 

 

900

 

(Promissory note issued Bansal Traders for Rs 900)

 

 

 

 

 

 

 

 

 

 

 

2016

 

 

 

 

 

 

Dec.26

Purchases A/c

Dr.

 

1,080

 

 

 

To Bansal Traders

 

 

 

1,080

 

(Goods bought from Bansal Traders list price Rs

1,200 at 10% Trade discount)

 

 

 

 

 

 

 

 

 

 

2016

 

 

 

 

 

 

Dec.26

Bansal Traders

Dr.

 

1,080

 

 

 

To Bills Payable A/c

 

 

 

1,080

 

(Promissory note received from Bansal Traders)

 

 

 

 

 

 

 

 

 

 

2016

 

 

 

 

 

 

Dec.28

Purchases A/c

Dr.

 

1,800

 

 

 

To Bansal Traders

 

 

 

1,800

 

(Goods bought from Bansal Traders list price Rs

2,000 at 10% trade discount)

 

 

 

 

 

 

 

 

 

 

2016

 

 

 

 

 

 

Dec.28

Bansal Traders

Dr.

 

1,800

 

 

 

To Bills Payable A/c

 

 

 

1,800

 

(Promissory note issued to Bansal Traders)

 

 

 

 

 

 

 

 

 

 

2016

 

 

 

 

 

 

Dec.31

Purchases A/c

Dr.

 

4,500

 

 

 

To Bansal Traders

 

 

 

4,500

 

(Goods bought from Bansal Traders of list price Rs

 5,000 at 10% trade discount)

 

 

 

 

 

 

 

 

 

 

2016

 

 

 

 

 

 

Dec.31

Bansal Traders

Dr.

 

4,500

 

 

 

To Bills Payable A/c

 

 

 

4,500

 

(Promissory note issued to Bansal Traders)

 

 

 

 

 

 

 

 

 

 

2017

 

 

 

 

 

 

Jan.23

Bills Payable A/c

Dr.

 

900

 

 

 

To Cash A/c

 

 

 

900

 

(The first promissory note discharged on its due date)

 

 

 

 

 

 

 

 

 

 

 

2017

 

 

 

 

 

 

Jan.28

Bills Payable A/c

Dr.

 

1,080

 

 

 

To Bank A/c

 

 

 

1,080

 

(The second promissory note discharged on its due

date)

 

 

 

 

 

 

 

 

 

 

2017

 

 

 

 

 

 

Jan.30

Bills Payable A/c

Dr.

 

1,800

 

 

 

To Cash A/c

 

 

 

1,800

 

(The third promissory discharged by paying Rs

 1,800 to Dream Soaps)

 

 

 

 

 

 

 

 

 

 

2017

 

 

 

 

 

 

Feb.02

Bills Payable A/c

Dr.

 

4,500

 

 

 

To Bank A/c

 

 

 

4,500

 

(The fourth promissory note discharged by paid Rs 4,500 to Bank)

 

 

 

 

 

 

 

 

 

 

 

In the books of Mohan Traders

BansalTrader’s Account

Dr.

 

 

 

 

 

 

Cr.

Date

Particulars

J.F.

Amount Rs

Date

Particulars

J.F.

Amount Rs

2016

 

 

 

2016

 

 

 

Dec.21

Bills Payable

 

900

Dec.21

Purchases

 

900

Dec.26

Bills Payable

 

1,080

Dec.26

Purchases

 

1,080

Dec.28

Bills Payable

 

1,800

Dec.28

Purchases

 

1,800

Dec.31

Bills Payable

 

4,500

Dec.31

Purchases

 

4,500

 

 

 

8,280

 

 

 

8,280

 

 

 

 

 

 

 

 

Page No 312:

Question 9:

Narayanan purchased goods for Rs 25,000 from Ravinderan on Feb. 01, 2016. Ravinderan drew upon Narayanan a bill of exchange for the same amount payable after 30 days. On the due date Narayanan dishonoured his acceptance. Pass the necessary journal entries in the books of Ravinderan and Narayanan in following cases:

·         When the bill was retained by Ravinderan with him till the date of its maturity.

·         When the bill was discounted by Ravinderan immediately with his bank @ 6% p.a.

·         When the bill was endorsed to his creditor Ganeshan.

·         When the bill was sent by Ravinderan to his bank for collection a few days before it maturity.

 

 

ANSWER:

Case (i) : When the bill was retained by Ravinderan with him till the date of its maturity

 

Books of Ravinderan

Journal

Date

 

Particulars

 

L.F.

Debit Amount Rs

Credit Amount Rs

2016

 

 

 

 

 

Feb.01

Narayanan

Dr.

 

25,000

 

 

 

To Sales A/c

 

 

 

25,000

 

(Goods sold to Narayanan)

 

 

 

 

 

 

 

 

 

 

 

Feb.01

Bills Receivable A/c

Dr.

 

25,000

 

 

 

To Narayanan

 

 

 

25,000

 

(Narayanan’s acceptance received for 30 days)

 

 

 

 

 

 

 

 

 

 

 

Mar.05

Narayanan

Dr.

 

25,000

 

 

 

To Bills Receivable A/c

 

 

 

25,000

 

(Narayanan failed to meet his

 acceptance and bill dishonoured)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Books of Narayanan

Journal

Date

 

Particulars

 

L.F.

Debit Amount Rs

Credit Amount Rs

2016

 

 

 

 

 

 

Feb.01

Purchases A/c

Dr.

 

25,000

 

 

 

To Ravinderan

 

 

 

25,000

 

(Goods bought from Ravinderan)

 

 

 

 

 

 

 

 

 

 

Feb.01

Ravinderan

Dr.

 

25,000

 

 

 

To Bills Payable A/c

 

 

 

25,000

 

(Ravinderan’s bill accepted)

 

 

 

 

 

 

 

 

 

 

 

Mar.05

Bills Payable A/c

Dr.

 

25,000

 

 

 

To Ravinderan A/c

 

 

 

25,000

 

(Bill dishonoured on maturity)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Case (ii) : When the bill was discounted by Ravinderan immediately with his bank @ 6% p.a.

 

Books of Ravinderan

Journal

Date

 

Particulars

 

L.F.

Debit Amount Rs

Credit Amount Rs

 

 

 

 

 

 

 

2016

 

 

 

 

 

Feb.01

Narayanan

Dr.

 

25,000

 

 

 

To Sales A/c

 

 

 

25,000

 

(Goods sold to Narayanan)

 

 

 

 

 

 

 

 

 

 

 

Feb.01

Bills Receivable A/c

Dr.

 

25,000

 

 

 

To Narayanan

 

 

 

25,000 

 

(Narayanan’s acceptance received)

 

 

 

 

 

 

 

 

 

 

 

Feb.01

Bank A/c

Dr.

 

24,875

 

 

Discount A/c

Dr.

 

125

 

 

 

To Bills Receivable A/c

 

 

 

25,000

 

(Narayanan’s acceptance got discounted with

bank @ 6% p.a.)

 

 

 

 

 

 

 

 

 

 

Mar.05

Narayanan

 

 

25,000

 

 

 

To Bank A/c

 

 

 

25,000

 

(Narayanan’s acceptance dishonoured)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Books of Narayanan

Journal

Date

Particulars

 

L.F.

Debit Amount Rs

Credit Amount Rs

2016

 

 

 

 

 

 

Feb.01

Purchases A/c

Dr.

 

25,000

 

 

 

To Ravinderan

 

 

 

25,000

 

(Goods bought from Raivnderan)

 

 

 

 

 

 

 

 

 

 

Feb.01

Ravinderan

Dr.

 

25,000

 

 

 

To Bills Payable A/c

 

 

 

25,000

 

(Ravinderan’s bill accepted)

 

 

 

 

 

 

 

 

 

 

 

Mar.05

Bills Payable A/c

Dr.

 

25,000

 

 

 

To Ravinderan

 

 

 

25,000

 

(Bill dishonoured on maturity)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Case (iii) : When the bill was endorsed to his creditor Ganeshan

 

Books of Ravinderan

Journal

Date

 

Particulars

 

L.F.

Debit Amount Rs

Credit Amount Rs

 

 

 

 

 

 

 

2016

 

 

 

 

 

Feb.01

Narayanan

Dr.

 

25,000

 

 

 

To Sales A/c

 

 

 

25,000

 

(Goods sold to Narayanan)

 

 

 

 

 

 

 

 

 

 

 

Feb.01

Bills Receivable A/c

Dr.

 

25,000

 

 

 

To Narayanan

 

 

 

25,000

 

(Narayanan’s acceptance received)

 

 

 

 

 

 

 

 

 

 

 

Feb.01

Ganeshan

Dr.

 

25,000

 

 

 

To Bills Receivable A/c

 

 

 

25,000

 

(Narayanan’s acceptance endorsed in favour

 of Ganeshan)

 

 

 

 

 

 

 

 

 

 

 

Mar.05

Narayanan

Dr.

 

 

 

 

 

To Ganeshan A/c

 

 

 

25,000

 

(Narayanan’s acceptance dishonoured)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Books of Narayanan

Journal

Date

 

Particulars

L.F.

Debit Amount Rs

Credit Amount Rs

2016

 

 

 

 

 

 

Feb.01

Purchases A/c

Dr.

 

25,000

 

 

 

To Ravinderan

 

 

 

25,000

 

(Goods bought from Ravinderan)

 

 

 

 

 

 

 

 

 

 

Feb.01

Ravinderan

Dr.

 

25,000

 

 

 

To Bills Payable A/c

 

 

 

25,000

 

(Ravinderan’s bill accepted)

 

 

 

 

 

 

 

 

 

 

 

Mar.05

Bills Payable A/c

Dr.

 

25,000

 

 

 

To Ravinderan

 

 

 

25,000

 

(Ravinderan’s bill dishonoured on due date)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Case (iv) : When the bill was sent by Ravinderan to his bank for collection a few days before it maturity

 

Books of Ravinderan

Journal

Date

 

Particulars

 

L.F.

Debit Amount Rs

Credit Amount Rs

 

 

 

 

 

 

 

2016

 

 

 

 

 

Feb.01

Narayanan

Dr.

 

25,000

 

 

 

To Sales A/c

 

 

 

25,000

 

(Goods sold to Narayanan)

 

 

 

 

 

 

 

 

 

 

 

Feb.01

Bills Receivable A/c

Dr.

 

25,000

 

 

 

To Narayanan

 

 

 

25,000

 

(Narayanan’s acceptance received)

 

 

 

 

 

 

 

 

 

 

 

Feb.01

Bill Sent for Collection A/c

Dr.

 

25,000

 

 

 

To Bills Receivable A/c

 

 

 

25,000

 

(Bill sent to bank for collection)

 

 

 

 

 

 

 

 

 

 

 

Mar.05

Narayanan

Dr.

 

25,000

 

 

 

To Bill Sent for Collection A/c

 

 

 

25,000

 

(Bill got dishonoured)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Books of Narayanan

Journal

Date

 

Particulars

 

L.F.

Debit Amount Rs

Credit Amount Rs

2016

 

 

 

 

 

 

Feb.01

Purchases A/c

Dr.

 

25,000

 

 

 

To Ravinderan

 

 

 

25,000

 

(Bought goods from Ravinderan)

 

 

 

 

 

 

 

 

 

 

Feb.01

Ravinderan

Dr.

 

25,000

 

 

 

To Bills Payable A/c

 

 

 

25,000

 

(Ravinderan’s bill accepted)

 

 

 

 

 

 

 

 

 

 

 

Mar.05

Bills Payable A/c

Dr.

 

25,000

 

 

 

To Ravinderan

 

 

 

25,000

 

(Ravinderan’s bill dishonoured)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Page No 312:

Question 10:

Ravi sold goods for Rs 40,000 to Sudershan on Feb 13, 2016. He drew four bills of exchange upon Sudershan. The first bill was for Rs 5,000 payable after one month. The second bill was for Rs 10,000 payable after 40 days; the third bill was for Rs 12,000 payable after three months and fourth bill was for the balance amount payable after 19 days. Sudershan accepted all the bills and returned the same to Ravi. Ravi discounted the first bill with his bank at 6% p.a. He endorsed the second bill to his creditor Mustaq for the full settlement of a debt of Rs 10,200. The third bill was kept by Ravi with him till the date of maturity. Five days before the maturity of the fourth bill, Ravi sent the bill to his bank for collection. All the four bills were dishounoured by Sudarshan on maturity. Sudershan settled Ravi’s claim in cash three days after the dishonour of each bill along with interest @ 12% p.a. for the terms of the bills. You are requested to record the necessary journal entries in the books to Ravi, Sudershan, Mustaq and bank for the above transaction. Also prepare Sudershan’s account and Mustaq’s account in the books of Ravi.

 

ANSWER:

Books of Ravi

Journal

Date

 

Particulars

 

L.F.

Debit Amount

Rs

Credit Amount Rs

2016

 

 

 

 

 

Feb.13

Sudershan

Dr.

 

40,000

 

 

 

To Sales A/c

 

 

 

40,000

 

(Goods sold to Sudershan)

 

 

 

 

 

 

 

 

 

 

 

Feb.13

Bills Receivable A/c

Dr.

 

40,000

 

 

 

To Sudershan

 

 

 

40,000

 

(Four bills from Sudershan received: the first for Rs

 5,000, the second bill for Rs 10,000, the third bill for

Rs 12,000 and the fourth bill for Rs 13)

 

 

 

 

 

 

 

 

 

 

 

Feb.13

Bank A/c

Dr.

 

4,975

 

 

Discount A/c

Dr.

 

25

 

 

 

To Bills Receivable A/c

 

 

 

5,000

 

(The first bill discounted with bank at 6% p.a.)

 

 

 

 

 

 

 

 

 

 

 

Feb.13

Mustaq

Dr.

 

10,200

 

 

 

To Bills Receivable A/c

 

 

 

10,000

 

 

To Discount Received A/c

 

 

 

200

 

(The second bill endorsed to Mustaq in full settlement

of amount due to him)

 

 

 

 

 

 

 

 

 

 

Mar.03

Bill Sent for Collection A/c

Dr.

 

13,000

 

 

 

To Bills Receivable A/c

 

 

 

13,000

 

(The fourth bill sent to bank for collection)

 

 

 

 

 

 

 

 

 

 

 

Mar.07

Sudershan

Dr.

 

13,000

 

 

 

To Bill Sent for Collection A/c

 

 

 

13,000

 

(The fourth bill dishonoured on due date)

 

 

 

 

 

 

 

 

 

 

 

Mar.07

Sudershan

Dr.

 

81

 

 

 

To Interest A/c

 

 

 

81

 

(Interest due on the fourth bill Rs 13,000 for 19

days at 12% p.a,)

 

 

 

 

 

 

 

 

 

 

 

Mar.10

Cash A/c

Dr.

 

13,081

 

 

 

To Sudershan

 

 

 

13,081

 

(Cash received from Sudershan)

 

 

 

 

 

 

 

 

 

 

Mar.16

Sudershan

Dr.

 

5,000

 

 

 

To Bank A/c

 

 

 

5,000

 

(The first bill dishonoured)

 

 

 

 

 

 

 

 

 

 

Mar.16

Sudershan

Dr.

 

50

 

 

 

To Interest A/c

 

 

 

50

 

(Interest due on amount Rs 5,000 at 12%

for one month)

 

 

 

 

 

 

 

 

 

 

 

Mar.19

Cash A/c

Dr.

 

5,050

 

 

 

To Sudershan A/c

 

 

 

5,050

 

(Sudershan paid the amount due on account

 dishonoured of the first bill plus interest)

 

 

 

 

 

 

 

 

 

 

Mar.28

Sudershan

Dr.

 

10,000

 

 

Discount Received A/c

Dr.

 

200

 

 

 

To Mustaq

 

 

 

10,200

 

(The second bill dishonoured, which had endorsed

 in favour of Mustaq)

 

 

 

 

 

 

 

 

 

 

Mar.28

Sudershan

Dr.

 

132

 

 

 

To Interest A/c

 

 

 

132

 

(Interest charged at 12% on the amount due on account

of dishonour of the second bill Rs 10,000)

 

 

 

 

 

 

 

 

 

 

Apr.01

Cash A/c

Dr.

 

10,132

 

 

 

To Sudershan A/c

 

 

 

10,132

 

(Received cash from Sudershan for the second bill

along with interest)

 

 

 

 

 

 

 

 

 

 

May16

Sudershan

Dr.

 

12,000

 

 

 

To Bills Receivable A/c

 

 

 

12,000

 

(The third bill dishonoured on due date)

 

 

 

 

 

 

 

 

 

 

 

May16

Sudershan

Dr.

 

360

 

 

 

To Interest A/c

 

 

 

360

 

(Interest at 12% for 3 months charged on the amount due

on account of dishounor the third bill Rs 12,000)

 

 

 

 

 

 

 

 

 

 

May19

Cash A/c

Dr.

 

12,360

 

 

 

To Sudershan

 

 

 

12,360

 

(Cash received from Sudershan for the third bill along with interest 12% p.a.)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ledger

Sundershan’sAccount

Dr.

 

 

 

 

 

 

Cr.

Date

Particulars

J.F.

Amount Rs

Date

Particulars

J.F.

Amount Rs

2016

 

 

 

2016

 

 

 

Feb.13

Sales

 

40,000

Feb.13

Bills Receivable

 

40,000

Mar.07

Bill sent for Collection

 

13,000

Mar.10

Cash

 

13,081

Mar.07

Interest

 

81

Mar.19

Cash

 

5,050

Mar.16

Bank

 

5,000

Apr.01

Cash

 

10,132

Mar.16

Interest

 

50

May19

Cash

 

12,360

Mar.28

Mustaq

 

10,000

 

 

 

 

Mar.28

Interest

 

132

 

 

 

 

May 16

Bills Receivable

 

12,000

 

 

 

 

May 16

Interest

 

360

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

80,623

 

 

 

80,623

 

 

 

 

 

 

 

 

 

Mustaq’sAccount

Dr.

 

 

 

 

 

 

Cr.

Date

Particulars

J.F.

Amount 

Rs

Date

Particulars

J.F.

Amount 

Rs

2016

 

 

 

2016

 

 

 

Feb.13

B/R

 

10,000

Mar.28

Sudershan

 

10,000

Feb.13

Discount Received

 

200

Mar.28

Discount Received

 

200

 

 

 

 

 

 

 

 

 

 

 

10,200

 

 

 

10,200

 

 

 

 

 

 

 

 

 

Books of Sudershan

Journal

Date

 

Particulars

 

L.F.

Debit Amount Rs

Credit Amount Rs

2016

 

 

 

 

 

 

Feb.13

Purchases A/c

Dr.

 

40,000

 

 

 

To Ravi

 

 

 

40,000

 

(Goods bought from Ravi)

 

 

 

 

 

 

 

 

 

 

Feb.13

Ravi

Dr.

 

40,000

 

 

 

To Bills Payable A/c

 

 

 

40,000

 

(Four bills drawn by Ravi accepted: the first bill for

Rs 5,000 payable after one month, the second for

Rs 10,000 payable after 40 days, the third for Rs 12,000

payable after 3 months and the fourth for Rs 13,000

payable after 19 days)

 

 

 

 

 

 

 

 

 

 

Mar.07

Bills Payable A/c

Dr.

 

13,000

 

 

 

To Ravi

 

 

 

13,000

 

(The fourth bill dishonoured)

 

 

 

 

 

 

 

 

 

 

 

Mar.07

Interest A/c

Dr.

 

81

 

 

 

To Ravi

 

 

 

81

 

(Interest charged for the amount of fourth bill

at 12% p.a.)

 

 

 

 

 

 

 

 

 

 

 

Mar.10

Ravi

Dr.

 

13,081

 

 

 

To Cash A/c

 

 

 

13,081

 

(Cash paid to Ravi for amount due on account of

dishounor of the fourth bill along with interest

at 12% p.a. for 19 days)

 

 

 

 

 

 

 

 

 

 

Mar.16

Bills Payable A/c

Dr.

 

5,000

 

 

 

To Ravi

 

 

 

5,000

 

(The first bill dishonoured)

 

 

 

 

 

 

 

 

 

 

 

Mar.16

Interest A/c

Dr.

 

50

 

 

 

To Ravi

 

 

 

50

 

(Interest charged at 12% p.a. on the first bill for one month)

 

 

 

 

 

 

 

 

 

 

Mar.19

Ravi

Dr.

 

5,050

 

 

 

To Cash A/c

 

 

 

5,050

 

(Cash paid to Ravi for amount due on account of

dishounor of the first bill along with interest

at 12% p.a. for one month)

 

 

 

 

 

 

 

 

 

 

 

Mar.28

Bills Payable A/c

Dr.

 

10,000

 

 

 

To Ravi

 

 

 

10,000

 

(The second bill dishonoured)

 

 

 

 

 

 

 

 

 

 

 

Mar.28

Interest A/c

Dr.

 

132

 

 

 

To Ravi

 

 

 

132

 

(Interest charged at 12% p.a. for 40 days on the second bill)

 

 

 

 

 

 

 

 

 

 

Apr.01

Ravi

Dr.

 

10,132

 

 

 

To Cash A/c

 

 

 

10,132

 

(Cash paid to Ravi for amount due on account of

dishounor of the second bill along with interest

at 12% p.a. for 40 days)

 

 

 

 

 

 

 

 

 

 

May 16

Bills Payable A/c

Dr.

 

12,000

 

 

 

To Ravi

 

 

 

12,000

 

(The third bill dishonoured)

 

 

 

 

 

 

 

 

 

 

 

Mar.16

Interest A/c

Dr.

 

360

 

 

 

To Ravi

 

 

 

360

 

(Interest charged at 12% p.a. for 3 months on third bill)

 

 

 

 

 

 

 

 

 

 

May 19

Ravi

Dr.

 

12,360

 

 

 

To Cash A/c

 

 

 

12,360

 

(Cash paid to Ravi for amount due on account of

dishounor of the third bill along with interest

at 12% p.a. for 3 months)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Books of Mustaq

Journal

Date

 

Particulars

 

L.F

Debit Amount Rs

Credit Amount Rs

2016

 

 

 

 

 

 

Feb.13

Bills Receivable A/c

Dr.

 

10,000

 

 

Discount Allowed A/c

Dr.

 

200

 

 

 

To Ravi

 

 

 

10,200

 

(Bills Receivable received from Ravi and

 allowed discount)

 

 

 

 

 

 

 

 

 

 

 

Mar.28

Ravi

Dr.

 

10,200

 

 

 

To Bills Receivable A/c

 

 

 

10,000

 

 

To Discount Received

 

 

 

200

 

(Bill dishonoured)

 

 

 

 

 

 

 

 

 

 

 

 

Books of Bank

Journal

Date

 

Particulars

 

L.F

Debit Amount

Rs

Credit Amount 

Rs

2016

 

 

 

 

 

 

Mar.03

Bills Receivable A/c

Dr.

 

13,000

 

 

 

To Bills for Collection A/c

 

 

 

13,000

 

(Bill received from Ravi for collection)

 

 

 

 

 

 

 

 

 

 

 

Mar.07

Bills for Collection A/c

Dr.

 

13,000

 

 

 

To Bills Receivable A/c

 

 

 

13,000

 

(Bill dishonoured)

 

 

 

 

 

 

 

 

 

 

 

 

 



Page No 313:

Question 11:

On Jan 01, 2016 Neha sold goods for Rs 20,000 to Muskan and drew upon her a bill of exchange payable after two months. One month before the maturity of the bill Muskan approached Neha to accept the payment against the bill at a rebate @ 12% p.a. Neha agreed to the request of Muskan and Muskan retired the bill under the agreed rate of rebate. Journalise the above transaction in the books of Neha and Muskan.

 

 

ANSWER:

Books of Neha

Journal

Date

 

Particulars

 

L.F.

Debit Amount Rs

Credit Amount Rs

2016

 

 

 

 

 

 

Jan.01

Muskan

Dr.

 

20,000

 

 

 

To Sales A/c

 

 

 

20,000

 

(Goods sold to Muskan)

 

 

 

 

 

 

 

 

 

 

 

Jan.01

Bills Receivable A/c

Dr.

 

20,000

 

 

 

To Muskan

 

 

 

20,000

 

(Muskan’s acceptance received)

 

 

 

 

 

 

 

 

 

 

 

Feb.04

Cash A/c

Dr.

 

19,800

 

 

Rebate on bill A/c

Dr.

 

200

 

 

 

To Bills Receivable A/c

 

 

 

20,000

 

(Muskan’s acceptance retired one month before

 maturity and allowed rebate at 12% p.a.)

 

 

 

 

 

 

 

 

  

 

Books of Muskan

Journal

Date

 

Particulars

 

L.F.

Debit Amount Rs

Credit Amount Rs

2016

 

 

 

 

 

 

Jan.01

Purchases A/c

Dr.

 

20,000

 

 

 

To Neha

 

 

 

20,000

 

(Goods bought from Neha)

 

 

 

 

 

 

 

 

 

 

 

Jan.01

Neha

Dr.

 

20,000

 

 

 

To Bills Payable A/c

 

 

 

20,000

 

(Bill drawn by Neha payable after 2 months

accepted)

 

 

 

 

 

 

 

 

 

 

 

Feb.04

Bills Payable A/c

Dr.

 

20,000

 

 

 

To Cash A/c

 

 

 

19,800

 

 

To Rebate on Bills A/c

 

 

 

200

 

(Bill paid one month before maturity and received

rebate at 12% p.a.)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Page No 313:

Question 12:

On Jan 15, 2016 Raghu sold goods worth Rs 35,000 to Devendra and drew up to the latter three bills of exchanges. The first bill was for Rs 5,000 payable after one month, the second bill was for Rs 20,000 payable after three months and third bill for balance amount for 4 months. Raghu endorsed the first bill in favour of his creditor Dewan in full settlement of a debt of Rs 5,200. The second bill was discounted by Raghu @ 6 % p.a. and the third bill was retained by Raghu till the date of maturity. Devendra dishonoured the bill on maturity and the bank paid Rs 30 as noting charges. Four days before the maturity of the third bill Raghu, sent the same for collection to his bank. The third bill was also dishonoured by Devendra and the bank paid Rs 200 as noting charges. Five days after the dishonour of the bill Devendra paid the entire amount due to Raghu along with interest Rs 1,000 for this purpose Devendra obtained a short term loan from his bank. You are requested to record the necessary journal entries in the books of Raghu Devendra and Dewan and also prepare Devendra’s account in Raghu’s books and Raghu’s account in Devendra’s account.

 

 

 

ANSWER:

Books of Raghu

Journal

Date

 

Particulars

 

L.F.

Debit Amount Rs

Credit Amount Rs

2016

 

 

 

 

 

 

Jan.15

Devendra

Dr.

 

35,000

 

 

 

To Sales A/c

 

 

 

35,000

 

(Goods sold to Devendra)

 

 

 

 

 

 

 

 

 

 

 

Jan.15

Bills Receivable A/c

Dr.

 

35,000

 

 

 

To Devendra

 

 

 

35,000

 

(Three bills received from Devendra–the first bill Rs 5,000,

the second bill Rs 20,000, the third bill Rs 10,000)

 

 

 

 

 

 

 

 

 

 

Jan.15

Dewan

Dr.

 

5,200

 

 

 

To Bills Receivable A/c

 

 

 

5,000

 

 

To Discount Received A/c

 

 

 

200

 

(The first bill endorsed to Dewan in full settlement

of amount due to him)

 

 

 

 

 

 

 

 

 

 

Jan.15

Bank A/c

Dr.

 

19,700

 

 

Discount A/c

Dr.

 

300

 

 

 

To Bills Receivable A/c

 

 

 

20,000

 

(The second bill discounted with bank at 6% p.a.)

 

 

 

 

 

 

 

 

 

 

 

Apr.18

Devendra

Dr.

 

20,030

 

 

 

To Bank A/c

 

 

 

20,030

 

(The second bill dishonoured and bank paid

 Rs 30 for noting charges)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

May14

Bill Sent for Collection A/c

Dr.

 

10,000

 

 

 

To Bills Receivable A/c

 

 

 

10,000

 

(The third bill sent to bank for collection)

 

 

 

 

 

 

 

 

 

 

 

May18

Davendra

Dr.

 

10,200

 

 

 

To Bill sent for collection A/c

 

 

 

10,000

 

 

To Bank A/c

 

 

 

200

 

(The third bill dishonoured and bank paid Rs 200

as noting charges)

 

 

 

 

 

 

 

 

 

 

May23

Davendra

Dr.

 

1,000

 

 

 

To Interest A/c

 

 

 

1,000

 

(Interest due to Devendra on account of bills

dishonoured)

 

 

 

 

 

 

 

 

 

 

 

May23

Cash A/c

Dr.

 

31,230

 

 

 

To Davendra

 

 

 

31,230

 

(Cash received from Davendra)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ledger 

Davendra’sAccount

Dr.

 

 

 

 

 

 

Cr.

Date

Particulars

J.F.

Amount Rs

Date

Particulars

J.F.

Amount Rs

2016

 

 

 

2016

 

 

 

Jan.15

Sales

 

35,000

Jan.15

Bills Receivable

 

35,000

Apr.18

Bank

 

20,030

May23

Cash

 

31,230

May18

Bills Sent for Collection

 

10,000

 

 

 

 

May18

Bank

 

200

 

 

 

 

May23

Interest

 

1,000

 

 

 

 

 

 

 

66,230

 

 

 

66,230

 

 

 

 

 

 

 

 

 

Books of Davendra

Journal

Date

 

Particulars

 

L.F.

Debit Amount Rs

Credit Amount Rs

2016

 

 

 

 

 

 

Jan.15

Purchases A/c

Dr.

 

35,000

 

 

 

To Raghu

 

 

 

35,000

 

(Goods bought from Raghu)

 

 

 

 

 

 

 

 

 

 

Jan.15

Raghu

Dr.

 

35,000

 

 

 

To Bills Payable A/c

 

 

 

35,000

 

(Three bills drawn by Raghu accepted: the first bill for

Rs 5,000 payable after one month, the second for Rs 20,000

payable after 3 months and the third for Rs 10,000

payable after 4 months)

 

 

 

 

 

 

 

 

 

 

Feb.18

Bills Payable A/c

Dr.

 

5,000

 

 

 

To Cash

 

 

 

5,000

 

(The first bill discharged on the due date)

 

 

 

 

 

 

 

 

 

 

 

Apr.18

Bills Payable A/c

Dr.

 

20,000

 

 

Noting Charges A/c

Dr.

 

30

 

 

 

To Raghu

 

 

 

20,030

 

(The second bill dishonoured and Noting Charges

Rs 30)

 

 

 

 

 

 

 

 

 

 

 

May18

Bills Payable A/c

Dr.

 

10,000

 

 

Noting Charges A/c

Dr.

 

200

 

 

 

To Raghu

 

 

 

10,200 

 

(The third bill dishonoured and Noting Charges Rs 200)

 

 

 

 

 

 

 

 

 

 

 

May23

Interest A/c

Dr.

 

1,000

 

 

 

To Raghu

 

 

 

1,000

 

(Interest charged Rs 1,000 on account of

bills dishonoured)

 

 

 

 

 

 

 

 

 

 

 

May23

Cash A/c

Dr.

 

31,230

 

 

 

To Bank Loan A/c

 

 

 

31,230

 

(Bank loan taken for settling Raghu’s account)

 

 

 

 

 

 

 

 

 

 

 

May23

Raghu

Dr.

 

31,230

 

 

 

To Cash A/c

 

 

 

31,230

 

(Cash paid to Raghu)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ledger

Raghu’sAccount

Dr.

 

 

 

 

 

 

Cr.

Date

Particulars

J.F.

Amount 

Rs

Date

Particulars

J.F.

Amount 

Rs

2016

 

 

 

2016

 

 

 

Jan.15

Bills Payable

 

35,000

Jan.15

Purchases

 

35,000

May23

Cash

 

31,230

Apr.18

Bills Payable

 

20,000

 

 

 

 

Apr.18

Noting Charges

 

30

 

 

 

 

May18

Bills Payable

 

10,000

 

 

 

 

May18

Noting Charges

 

200

 

 

 

 

May18

Interest

 

1,000

 

 

 

66,230

 

 

 

66,230

 

 

 

 

 

 

 

 

 

Books of Dewan

Journal

Date

 

Particulars

 

L.F.

Debit Amount Rs

Credit Amount Rs

2016

 

 

 

 

 

 

Jan.15

Bills Receivable A/c

Dr.

 

5,000

 

 

Discount Allowed A/c

Dr.

 

200

 

 

 

To Raghu

 

 

 

 5,200

 

(Bill Receivable received from Raghu for one month and

allowed him discount of Rs 200)

 

 

 

 

 

 

 

 

 

 

Feb.18

Cash A/c

Dr.

 

5,000

 

 

 

To Bills Receivable A/c

 

 

 

5,000

 

(Bill met on maturity)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note: In this question, there is no information regarding honour of the first bill of Rs 5,000. Therefore, it has been assumed that the first bill has been met on maturity.

 

 

Page No 313:

Question 13:

Vimal purchased goods Rs 25,000 from Kamal on Jan 15, 2016 and accepted a bill of exchange drawn upon him by Kamal payable after two months. On the date of the maturity the bill was duly presented for payment. Vimal dishonoured the bill. record the necessary journal entries in the books of Kamal and Vimal when.

•    The bill was retained by Kamal till the date of its maturity.

•    The bill was immediately discounted by Kamal with his bank @ 6% p.a.

•    The bill was endorsed by Kamal in favour of his creditor Sharad.

•    Five days before its maturity the bill was sent by Kamal to his bank for collection.

 

 

ANSWER:

Case (i) : The bill was retained by Kamal till the date of its maturity

 

Books of Kamal

Journal

Date

 

Particulars

 

L.F.

Debit Amount Rs

Credit Amount Rs

2016

 

 

 

 

 

Jan.15

Vimal

Dr.

 

25,000

 

 

 

To Sales A/c

 

 

 

25,000

 

(Goods sold to Vimal)

 

 

 

 

 

 

 

 

 

 

 

Jan.15

Bills Receivable A/c

Dr.

 

25,000

 

 

 

To Vimal

 

 

 

25,000

 

(Vimal’s acceptance reccived)

 

 

 

 

 

 

 

 

 

 

 

Mar.18

Vimal

Dr.

 

25,000

 

 

 

To Bills Receivable A/c

 

 

 

25,000

 

(Vimal acceptance dishonoured)

 

 

 

 

 

 

 

 

 

 

 

 

Books of Vimal

Journal

Date

Particulars

L.F.

Debit

Amount

Rs

Credit

Amount

Rs

2016

 

 

 

 

 

Jan.15

Purchases A/c

Dr.

 

25,000

 

 

 

To Kamal

 

 

 

25,000

 

(Goods bought from Kamal)

 

 

 

 

 

 

 

 

 

 

 

Jan.15

Kamal

Dr.

 

25,000

 

 

 

To Bills Payable A/c

 

 

 

25,000

 

(Bill drawn by Kamal accepted)

 

 

 

 

 

 

 

 

 

 

 

Mar.18

Bills Payable A/c

Dr.

 

25,000

 

 

 

To Kamal

 

 

 

25,000

 

(Bill drawn by Kamal dishonoured)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Case (ii) : The bill was immediately discounted by Kamal with his bank @ 6% p.a.

 

Books of Kamal

Journal

Date

 

Particulars

 

L.F.

Debit Amount Rs

Credit Amount Rs

2016

 

 

 

 

 

 

Jan.15

Vimal

Dr.

 

25,000

 

 

 

To Sales A/c

 

 

 

25,000

 

(Goods sold to Vimal)

 

 

 

 

 

 

 

 

 

 

 

Jan.15

Bills Receivable A/c

Dr.

 

25,000

 

 

 

To Vimal

 

 

 

25,000

 

(Vimal’s acceptance received)

 

 

 

 

 

 

 

 

 

 

 

Jan.15

Bank A/c

Dr.

 

24,750

 

 

Discount A/c

Dr.

 

250

 

 

 

To Bills Receivable A/c

 

 

 

25,000

 

(Vimal’s acceptance discounted at 6% p.a. with

bank)

 

 

 

 

 

 

 

 

 

 

 

Mar.18

Vimal

Dr.

 

25,000

 

 

 

To Bank A/c

 

 

 

25,000

 

(Vimal’s aceptance dishonoured)

 

 

 

 

 

 

 

 

 

 

 

 

Books of Vimal

Journal

Date

 

Particulars

 

L.F.

Debit Amount Rs

Credit Amount Rs

2016

 

 

 

 

 

Jan.15

Purchases A/c

Dr.

 

25,000

 

 

 

To Kamal

 

 

 

25,000

 

(Goods bought from Kamal)

 

 

 

 

 

 

 

 

 

 

 

Jan.15

Kamal

Dr.

 

25,000

 

 

 

To Bills Payable A/c

 

 

 

25,000

 

(Bill drawn by Kamal accepted)

 

 

 

 

 

 

 

 

 

 

 

Mar.18

Bills Payable A/c

Dr.

 

25,000

 

 

 

To Kamal

 

 

 

25,000

 

(Bill drawn by Kamal dishonoured)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Case (iii) : The bill was endorsed by Kamal in favour of his creditor Sharad

 

Books of Kamal

Journal

Date

 

Particulars

 

L.F.

Debit Amount Rs

Credit Amount Rs

 

 

 

 

 

 

 

2016

 

 

 

 

 

 

Jan.15

Vimal

Dr.

 

25,000

 

 

 

To Sales A/c

 

 

 

25,000

 

(Goods sold to Vimal)

 

 

 

 

 

 

 

 

 

 

 

Jan.15

Bills Receivable A/c

Dr.

 

25,000

 

 

 

To Vimal

 

 

 

25,000

 

(Vimal’s acceptence received)

 

 

 

 

 

 

 

 

 

 

 

Jan.15

Sharad

Dr.

 

25,000

 

 

 

To Bills Receivable A/c

 

 

 

25,000

 

(Vimal’s acceptance endorsed to Sharad)

 

 

 

 

 

 

 

 

 

 

 

Mar.18

Vimal

Dr.

 

25,000

 

 

 

To Sharad

 

 

 

25,000

 

(Vimal’s acceptance endorsed to Kamal dishonoured)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Books of Vimal

Journal

Date

 

Particulars

 

L.F.

Debit Amount Rs

Credit Amount Rs

2016

 

 

 

 

 

Jan.15

Purchases A/c

Dr.

 

25,000

 

 

 

To Kamal

 

 

 

25,000

 

(Goods bought from Kamal)

 

 

 

 

 

 

 

 

 

 

 

Jan.15

Kamal

Dr.

 

25,000

 

 

 

To Bills Payable A/c

 

 

 

25,000

 

(Bill drawn by Kamal accepted)

 

 

 

 

 

 

 

 

 

 

 

Mar.18

Bills Payable A/c

Dr.

 

25,000

 

 

 

To Kamal

 

 

 

25,000

 

(Bill drawn by Kamal dishonoured)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Case (iv) : Five days before its maturity the bill was sent by Kamal to his bank for collection

 

Books of Kamal

Journal

Date

 

Particulars

 

L.F.

Debit Amount Rs

Credit Amount Rs

2016

 

 

 

 

 

 

Jan.15

Vimal

Dr.

 

25,000

 

 

 

To Sales A/c

 

 

 

25,000

 

(Goods sold to Vimal)

 

 

 

 

 

 

 

 

 

 

 

Jan.15

Bills Receivable A/c

Dr.

 

25,000

 

 

 

To Vimal

 

 

 

25,000

 

(Vimal’s acceptance received, payable after two months)

 

 

 

 

 

 

 

 

 

 

 

Mar.13

Bill Sent for Collection A/c

Dr.

 

25,000

 

 

 

To Bills Receivable A/c

 

 

 

25,000

 

(Vimal’s acceptance sent to bank for collection)

 

 

 

 

 

 

 

 

 

 

 

Mar.18

Vimal

Dr.

 

25,000

 

 

 

To Bill Sent for Collection

 

 

 

25,000

 

(Vimal’s acceptance dishonoured)

 

 

 

 

 

 

 

 

 

 

 

 

Books of Vimal

Journal

Date

 

Particulars

 

L.F.

Debit Amount Rs

Credit Amount Rs

Case (iii)

 

 

 

 

 

 

2016

 

 

 

 

 

Jan.15

Purchases A/c

Dr.

 

25,000

 

 

 

To Kamal

 

 

 

25,000

 

(Goods bought from Kamal)

 

 

 

 

 

 

 

 

 

 

 

Jan.15

Kamal

Dr.

 

25,000

 

 

 

To Bills Payable A/c

 

 

 

25,000

 

(Bill drawn by Kamal accepted)

 

 

 

 

 

 

 

 

 

 

 

Mar.18

Bills Payable A/c

Dr.

 

25,000

 

 

 

To Kamal

 

 

 

25,000

 

(Bill drawn by Kamal dishonoured)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Page No 314:

Question 14:

Abdula sold goods to Tahir on Jan 17, 2017 for Rs 18,000. He drew a bill of exchange for the same amount on Tahir for 45 days. On the same date Tahir accepted the bill and returned it to Abdulla. On the due date Abdulla presented the bill to Tahir which was dishonoured. Abdulla paid Rs 40 as noting charges. Five days after the dishonour of his acceptance Tahir settled his debt by making a payment of Rs 18,700 including interest and noting charges. Record the necessary journal entries in the books of Abdulla and Tahir. Also prepare Tahir’s account in the books of Abdulla and Abdulla’s account in the books of Tahir.

 

 

ANSWER:

Books of Abdula

Journal

Date

 

Particulars

 

L.F.

Debit Amount Rs

Credit Amount Rs

2017

 

 

 

 

 

 

Jan.17

Tahir

Dr.

 

18,000

 

 

 

To Sales A/c

 

 

 

18,000

 

(Goods sold to Tahir)

 

 

 

 

 

 

 

 

 

 

 

Jan.17

Bills Receivable A/c

Dr.

 

18,000

 

 

 

To Tahir

 

 

 

18,000

 

(Tahir’s acceptance received)

 

 

 

 

 

 

 

 

 

 

 

Mar.06

Tahir

Dr.

 

18,040

 

 

 

To Bills Receivable A/c

 

 

 

18,000

 

 

To Cash

 

 

 

40

 

(Tahir’s acceptance dishonoured and Rs 40 paid as

noting charges)

 

 

 

 

 

 

 

 

 

 

Mar.06

Tahir

Dr.

 

660

 

 

 

To Interest A/c

 

 

 

660

 

(Interest charged from Tahir on account of bill

dishonoured)

 

 

 

 

 

 

 

 

 

 

 

Mar.12

Cash A/c

Dr.

 

18,700

 

 

 

To Tahir

 

 

 

18,700

 

(Tahir cleared his account by paying cash)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ledger 

 Tahir’s Account

Dr.

 

 

 

 

 

 

Cr.

Date

Particulars

J.F.

Amount Rs

Date

Particulars

J.F.

Amount Rs

2017

 

 

 

2017

 

 

 

Jan.17

Sales

 

18,000

Jan.17

Bills Receivable

 

18,000

Mar.06

Bills Receivable

 

18,000

Mar.11

Cash

 

18,700

Mar.06

Cash

 

40

 

 

 

 

Mar.06

Interest

 

660

 

 

 

 

 

 

 

36,700

 

 

 

36,700

 

 

 

 

 

 

 

 

 

Books of Tahir

Journal

Date

 

Particulars

 

L.F.

Debit Amount Rs

Credit Amount Rs

2017

 

 

 

 

 

Jan.17

Purchases A/c

Dr.

 

18,000

 

 

 

To Abdula

 

 

 

18,000

 

(Goods bought from Abdula)

 

 

 

 

 

 

 

 

 

 

 

Jan.17

Abdula

Dr.

 

18,000

 

 

 

To Bills Payable A/c

 

 

 

18,000

 

(Bill drawn by Abdula accepted, payable after 15 days)

 

 

 

 

 

 

 

 

 

 

 

Mar.06

Bills Payable A/c

Dr.

 

18,000

 

 

Noting Charges A/c

Dr.

 

40

 

 

 

To Abdula

 

 

 

18,040

 

(Abula’s bill dishonoured)

 

 

 

 

 

 

 

 

 

 

 

Mar.07

Interest A/c

Dr.

 

660

 

 

 

To Abdula

 

 

 

660

 

(Interest charged on account of bill dishonoured)

 

 

 

 

 

 

 

 

 

 

 

Mar.11

Abdula

Dr.

 

18,700

 

 

 

To Cash A/c

 

 

 

18,700

 

(Cash paid to Abdula)

 

 

 

 

 

 

 

 

 

 

 

 

Ledger

 Abdula’sAccount

Dr.

 

 

 

 

 

 

Cr.

Date

Particulars

J.F.

Amount Rs

Date

Particulars

J.F.

Amount Rs

2017

 

 

 

2017

 

 

 

Jan.17

Bills Payable

 

18,000

Jan.17

Purchases

 

18,000

Mar.11

Cash

 

18,700

Mar.06

Bills Payable

 

18,000

 

 

 

 

Mar.06

Noting Charges

 

40

 

 

 

 

Mar.06

Interest

 

660

 

 

 

36,700

 

 

 

36,700

 

 

 

 

 

 

 

 

 

Page No 314:

Question 15:

Asha sold goods worth Rs 19,000 to Nisha on March 02, 2017. Rs 4,000 were paid by Nisha immediately and for the balance she accepted a bill of exchange drawn upon her by Asha payable after three months. Asha discounted the bill immediately with her bank. On the due date Nisha dishonoured the bill and the bank paid Rs 30 as noting charges.

Record the necessary journal entries in the books of Asha and Nisha.

 

ANSWER:

Books of Asha

Journal

Date

 

Particulars

 

L.F.

Debit Amount Rs

Credit Amount Rs

2017

 

 

 

 

 

 

Mar.02

Nisha

Dr.

 

19,000

 

 

 

To Sales A/c

 

 

 

19,000

 

(Goods sold to Nisha)

 

 

 

 

 

 

 

 

 

 

 

Mar.02

Cash A/c

Dr.

 

4,000

 

 

Bills Receivable A/c

Dr.

 

15,000

 

 

 

To Nisha

 

 

 

19,000

 

(Cash and Nisha’s acceptance received)

 

 

 

 

 

 

 

 

 

 

Mar.02

Bank A/c

Dr.

 

14,635

 

 

Discount A/c

Dr.

 

375

 

 

 

To Bills Receivable A/c

 

 

 

15,000

 

(Nisha’s aceptance discounted with bank at 10% p.a.)

 

 

 

 

 

Note: In this question rate of discount is not 

given, the rate of discount (10% p.a.) has been

 assumed).

 

 

 

 

 

 

 

 

 

 

June.05

Nisha

Dr.

 

15,030

 

 

 

To Bank A/c

 

 

 

15,030

 

(Nisha’s acceptance dishonoured and bank

 paid Rs 30 as noting charges)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Books of Nisha

Journal

Date

 

Particulars

 

L.F.

Debit Amount 

Rs

Credit Amount Rs

2017

 

 

 

 

 

Mar.02

Purchases A/c

Dr.

 

19,000

 

 

 

To Asha

 

 

 

19,000

 

(Goods bought from Asha)

 

 

 

 

 

 

 

 

 

 

 

Mar.02

Asha

Dr.

 

19,000

 

 

 

To Bills Payable A/c

 

 

 

15,000

 

 

To Cash A/c

 

 

 

4,000

 

(Asha’s bill accepted payable after three month and

Rs 4,000 paid in cash)

 

 

 

 

 

 

 

 

 

 

Jun.05

Bills Payable A/c

Dr.

 

15,000

 

 

Noting Charges A/c

Dr.

 

30

 

 

 

To Asha

 

 

 

15,030

 

(Asha’s bill dishonoured)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Page No 314:

Question 16:

On Feb. 02, 2017, Verma purchased from Sharma goods for Rs 17,500. Verma paid Rs 2,500 immediately and for the balance gave a promissory note to Sharma payable after 60 days. Sharma immediately endorsed the promissory note in favour of his creditor.

Gupta for the full settlement of a debt of Rs 15,400. On the due date of the bill Gupta presented the bill to Verma which the latter dishonoured and Gupta paid Rs 5,000 noting charges. On the same date Gupta informed Sharma about the dishonour of the bill. Sharma settled his debt to Gupta by cheque for Rs 15,500 which includes noting charges and interest. Verma settled Sharma.s claim by cheque for the same amount.

Record the necessary journal entries is the books of Sharma, Gupta and Verma for the above transaction and prepare Verma.s and Gupta.s accounts in the books of Sharma. Sharma.s account in the books of Verma. And also Sharma’s account in the books of Gupta.

ANSWER:

Books of Sharma

Journal

Date

 

Particulars

 

L.F.

Debit Amount Rs

Credit Amount Rs

2017

 

 

 

 

 

 

Feb.02

Verma

Dr.

 

17,500

 

 

 

To Sales A/c

 

 

 

17,500

 

(Goods sold to Verma)

 

 

 

 

 

 

 

 

 

 

 

Feb.02

Cash A/c

Dr.

 

2,500

 

 

Bills Receivable A/c

Dr.

 

15,000

 

 

 

To Verma

 

 

 

17,500

 

(Cash Rs 2,500 and Promissory Note Rs 15,000 received

from Verma for 60 days)

 

 

 

 

 

 

 

 

 

 

Feb.02

Gupta A/c

Dr.

 

15,400

 

 

 

To Bills Receivable A/c

 

 

 

15,000

 

 

To Discount Received A/c

 

 

 

400

 

(Promissory Note endorsed to Gupta in full settlement

of amount due to him)

 

 

 

 

 

 

 

 

 

 

Apr.05

Discount Received A/c

Dr.

 

400

 

 

Verma

Dr.

 

15,050

 

 

 

To Gupta

 

 

 

15,450

 

(Promissory Note issued by Verma dishonoured

and Gupta paid Rs 50 as noting charges)

 

 

 

 

Note: In this question Rs 5,000 is given as noting charges, 

there is mistake. Here Rs 50 has been taken as noting 

charges instead of Rs 5,000).

 

 

 

 

 

 

 

 

 

 

Apr.06

Interest A/c

Dr.

 

50

 

 

 

To Gupta

 

 

 

50

 

(Interest of Rs 50 debited to Gupta, on account of

dishonour of Promissory Note)

 

 

 

 

 

 

 

 

 

 

Apr.06

Gupta

Dr.

 

15,500

 

 

 

To Bank A/c

 

 

 

15,500

 

(Gupta’s A/c settled)

 

 

 

 

 

 

 

 

 

 

 

Apr.06

Bank A/c

Dr.

 

15,050

 

 

 

To Verma

 

 

 

15,050

 

(Cheque received from Verma for the amount due from him)

 

 

 

 

 

 

 

 

 

 

 

 

Ledger

 Verma’s Account

Dr.

 

 

 

 

 

 

Cr.

Date

Particulars

J.F.

Amount Rs

Date

Particulars

J.F.

Amount Rs

2017

 

 

 

2017

 

 

 

Feb.02

Sales

 

17,500

Feb.02

Cash

 

2,500

Apr.06

Gupta

 

15,050

Feb.02

Bills Receivable

 

15,000

 

 

 

 

Apr.06

Bank

 

15,050

 

 

 

32,550

 

 

 

32,550

 

 

 

 

 

 

 

 

 

Gupta’s Account

Dr.

 

 

 

 

 

 

Cr.

Date

Particulars

J.F.

Amount

Rs

Date

Particulars

J.F.

Amount

Rs

2017

 

 

 

2017

 

 

 

Feb.02

B/R

 

15,000

Apr.01

Balance b/d

 

15,400

Feb.02

Discount Received

 

400

Apr.06

Verma

 

15,050

Feb.02

Bank

 

15,500

Apr.06

Discount Reserved

 

400

 

 

 

 

Apr.06

Interest

 

50

 

 

 

 

 

 

 

 

 

 

 

30,900

 

 

 

30,900

 

 

 

 

 

 

 

 

 

Books of Verma

Journal

Date

 

Particulars

 

L.F.

Debit Amount Rs

Credit Amount Rs

2017

 

 

 

 

 

Feb.02

Purchases A/c

Dr.

 

17,500

 

 

 

To Sharma

 

 

 

17,500

 

(Goods bought from Sharma)

 

 

 

 

 

 

 

 

 

 

Feb.02

Sharma

Dr.

 

17,500

 

 

 

To Bills Payable A/c

 

 

 

15,000

 

 

To Cash A/c

 

 

 

2,500 

 

(Cash Rs 2,500 paid and Promissory Note made for

the balance)

 

 

 

 

 

 

 

 

 

 

 

Apr.06

Bills Payable A/c

Dr.

 

15,000

 

 

Noting Charges A/c

Dr.

 

50

 

 

 

To Sharma

 

 

 

15,050

 

(Promissory Note dishonoured on maturity)

 

 

 

 

 

 

 

 

 

 

Apr.06

Sharma

Dr.

 

15,050

 

 

 

To Bank A/c

 

 

 

15,050

 

(Payment made to Sharma through cheque)

 

 

 

 

 

 

 

 

 

 

 

 

Ledger

 Sharma’s Account

Dr.

 

 

 

 

 

 

Cr.

Date

Particulars

J.F.

Amount

Rs

Date

Particulars

J.F.

Amount

Rs

2017

 

 

 

2017

 

 

 

Feb.02

Cash

 

2,500

Feb.02

Purchases

 

17,500

Feb.02

Bills Payable

 

15,000

Apr.06

Bills Payable

 

15,000

Apr.06

Bank

 

50

Apr.06

Noting Charges

 

50

 

 

 

 

 

 

 

 

 

 

 

30,900

 

 

 

30,900

 

 

 

 

 

 

 

 

 

Books of Gupta

Journal

Date

 

Particulars

 

L.F.

Debit Amount Rs

Credit Amount Rs

2017

 

 

 

 

 

Feb.02

Bills Receivable A/c

Dr.

 

15,000

 

 

Discount Allowed A/c

Dr.

 

400

 

 

 

To Sharma

 

 

 

15,400

 

(Promissory Note Rs 15,000 received from Sharma in

full settlement for 60 days)

 

 

 

 

 

 

 

 

 

 

Apr.06

Sharma

Dr.

 

15,450

 

 

 

To Bills Receivable A/c

 

 

 

15,000

 

 

To Discount Allowed A/c

 

 

 

400

 

 

To Bank A/c

 

 

 

50

 

(Promissory Note received from Sharma, dishonoured)

 

 

 

 

 

 

 

 

 

 

 

Apr.06

Sharma

Dr.

 

50

 

 

 

To Interest A/c

 

 

 

50

 

(Interest Rs 50 credited on account of Promissory Note

dishonoured)

 

 

 

 

 

 

 

 

 

 

Apr.06

Bank A/c

Dr.

 

15,500

 

 

 

To Sharma

 

 

 

15,500

 

(Cheque received from Sharma)

 

 

 

 

 

 

 

 

 

 

 

 

Ledger

 Sharma’s Account

Dr.

 

 

 

 

 

 

Cr.

Date

Particulars

J.F.

Amount

Rs

Date

Particulars

J.F.

Amount

Rs

2017

 

 

 

2017

 

 

 

Feb.01

Balance b/d

 

15,400

Feb.02

Bills Receivable

 

15,000

Apr.06

Bills Receivable

 

15,000

Feb.02

Discount Allowed

 

400

Apr.06

Discount Allowed

 

4,000

Apr.06

Bank

 

15,500

Apr.06

Bank

 

50

 

 

 

 

Apr.06

Interest

 

50

 

 

 

 

 

 

 

30,900

 

 

 

30,900

 

 

 

 

 

 

 

 

Page No 314:

Question 17:

Lilly sold goods to Mathew on 1.3.2017 for Rs 12,000 and drew upon Mathew a bill of exchange for the same amount payable after two months. Lilly immediately discounted the bill with her bank at 9% p.a. The maturity date of the bill was a non business day (holiday), therefore, Lilly had to present the bill as per the provisions of the Indian Instruments Act.1881. The bill was dishonoured by Mathew and Lilly paid Rs 45 as noting charges. Mathew settled the claim of Lilly five days after the dishonour of the bill by a cheque, which includes interest @ 12% for the term of the bill. Journalise the above transactions in the books of Lilly and Mathew and prepare Mathew’s account in the books of Lilly and Lilly’s account in the books of Mathew.

 

 

ANSWER:

Books of Lilly

Journal

Date

 

Particulars

 

L.F.

Debit Amount Rs

Credit Amount Rs

2017

 

 

 

 

 

 

Mar.01

Mathew

Dr.

 

12,000

 

 

 

To Sales A/c

 

 

 

12,000

 

(Goods sold to Mathew)

 

 

 

 

 

 

 

 

 

 

 

Mar.01

Bills Receivable A/c

Dr.

 

12,000

 

 

 

To Mathew

 

 

 

12,000

 

(Mathew’s acceptance payable after two months received)

 

 

 

 

 

 

 

 

 

 

 

Mar.01

Bank A/c

Dr.

 

11,820

 

 

Discount A/c

Dr.

 

180

 

 

 

To Bills Receivable A/c

 

 

 

12,000

 

(Mathew’s bill discounted at 9% p.a.)

 

 

 

 

 

 

 

 

 

 

May 03

Mathew A/c

Dr.

 

12,045

 

 

 

To Bank A/c

 

 

 

12,045

 

(Mathew’s acceptance dishonoured bank paid Rs 45 as

noting charges)

 

 

 

 

Note: In this question, May 04 has been considered as

Holiday, so the date of maturity will be May 03, 2006 in

place of May 04, 2006.

 

 

 

 

 

 

 

 

 

 

 

May 08

Mathew

Dr.

 

241

 

 

 

To Interest A/c

 

 

 

241

 

(Interest @ 12% credited to Mathew on account of bill dishonoured)

 

 

 

 

 

 

 

 

 

 

 

May 08

Bank A/c

Dr.

 

12,286

 

 

 

To Mathew

 

 

 

12,286

 

(Cheque received from Mathew for the amount due from him)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ledger

Mathew’s Account

Dr.

 

 

 

 

 

 

Cr.

Date

Particulars

J.F.

Amount Rs

Date

Particulars

J.F.

Amount Rs

2017

 

 

 

2017

 

 

 

Mar.01

Sales

 

12,000

Mar.01

Bills Receivable

 

12,000

May03

Bank

 

12,045

May08

Bank

 

12,286

May08

Interest

 

241

 

 

 

 

 

 

 

24,286

 

 

 

24,286

 

 

 

 

 

 

 

 

 

Books of Mathew

Journal

Date

 

Particulars

 

L.F.

Debit Amount Rs

Credit Amount Rs

2017

 

 

 

 

 

 

Mar.01

Purchases A/c

Dr.

 

12,000

 

 

 

To Lilly

 

 

 

12,000

 

(Goods bought from Lilly)

 

 

 

 

 

 

 

 

 

 

 

Mar.01

Lilly

Dr.

 

12,000

 

 

 

To Bills Payable A/c

 

 

 

12,000

 

(Lilly’s acceptance payable after two months accepted)

 

 

 

 

 

 

 

 

 

 

 

May 03

Bills Payable A/c

Dr.

 

12,000

 

 

Noting Charges A/c

Dr.

 

45

 

 

 

To Lilly

 

 

 

12,045

 

(Bill drawn by Lilly dishonoured)

 

 

 

 

 

 

 

 

 

 

 

May 08

Interest A/c

Dr.

 

241

 

 

 

To Lilly

 

 

 

241

 

(Interest charged @ 12% from Lilly on account of bill dishonoured)

 

 

 

 

 

 

 

 

 

 

 

May 08

Lilly

Dr.

 

12,286

 

 

 

To Bank A/c

 

 

 

12,286

 

(Amount paid to Lilly through cheque)

 

 

 

 

 

 

 

 

 

 

 

 

Ledger

 Lilly’s Account

Dr.

 

 

 

 

 

 

Cr.

Date

Particulars

J.F.

Amount Rs

Date

Particulars

J.F.

Amount Rs

2017

 

 

 

2017

 

 

 

Mar.01

Bills Payable

 

12,000

Mar.01

Purchases

 

12,000

May 09

Bank

 

12,286

May 03

Bills Payable

 

12,000

 

 

 

 

May 03

Noting charges

 

45

 

 

 

 

May 08

Interest

 

241

 

 

 

24,286

 

 

 

24,286

 

 

 

 

 

 

 

 

 

Note: In this question, there is a contradiction. As per the discounting rule–Bank is regarded as the holder of the bill. It is the bank who presents the bill for payment and also pays the noting charges on behalf of the drawer (Lilly). However, as per the question, Lilly, who is presenting, discounting the bill and also paying the noting charges. Thus, in the solution, we have assumed that it is bank and not Lilly who presents, discounts and pays the noting charges in case of dishonour of bill.

 

 

 

Page No 314:

Question 18:

Kapil purchased goods for Rs 21,000 from Gaurav on 1.2.2017 and accepted a bill of exchange drawn by Gaurav for the same amount. The bill was payable after one month. On 25.2.2017 Gaurav sent the bill to his bank for collection. The bill was duly presented by the bank. Kapil dishonoured the bill and the bank paid Rs 100 as noting charges. Record the necessary journal entries for the above transactions in the books of Kapil and Gourav.

 

 

ANSWER:

Books of Gaurav

Journal

Date

 

Particulars

 

L.F.

Debit Amount Rs

Credit Amount Rs

2017

 

 

 

 

 

 

Feb.01

Kapil

Dr.

 

21,000

 

 

 

To Sales A/c

 

 

 

21,000

 

(Goods sold to Kapil)

 

 

 

 

 

 

 

 

 

 

 

Feb.01

Bills Receivable A/c

Dr.

 

21,000

 

 

 

To Kapil

 

 

 

21,000

 

(Kapil’s acceptance received)

 

 

 

 

 

 

 

 

 

 

 

Feb.25

Bills Sent for Collection A/c

Dr.

 

21,000

 

 

 

To Bills Receivable A/c

 

 

 

21,000

 

(Bill Receivable sent to bank for collection)

 

 

 

 

 

 

 

 

 

 

 

Mar.04

Kapil

Dr.

 

21,100

 

 

 

To Bill Sent for Collection A/c

 

 

 

21,000

 

 

To Bank A/c

 

 

 

100

 

(Kapil’s acceptance dishonoured)

 

 

 

 

 

 

 

 

 

 

 

 

Books of Kapil

Journal

Date

 

Particulars

 

L.F.

Debit Amount Rs

Credit Amount Rs

2017

 

 

 

 

 

Feb.01

Purchases A/c

Dr.

 

21,000

 

 

 

To Gaurav

 

 

 

21,000

 

(Goods bought from Gaurav)

 

 

 

 

 

 

 

 

 

 

 

Feb.01

Gaurav

Dr.

 

21,000

 

 

 

To Bills Payable A/c

 

 

 

21,000

 

(Bill drawn by Gaurav payable after one month

accepted)

 

 

 

 

 

 

 

 

 

 

 

Mar.04

Bills Payable A/c

Dr.

 

21,000

 

 

Noting Charges A/c

Dr.

 

100

 

 

 

To Gaurav

 

 

 

21,100

 

(Bill drawn by Kapil dishonoured)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Page No 315:

Question 19:

On Feb. 14, 2017 Rashmi sold good Rs 7,500 to Alka. Alka paid Rs 500 in cash and for the bank balance accepted a bill of exchange drawn upon her by Rashmi payable after two months. On Apr.10, 2017 Alka approached Rashmi to cancel the bill since she was short of funds. She further requested Rashmi to accept Rs 2,000 in cash and draw a new bill for the balance including interest Rs 500. Rashmi accepted Alka’s request and drew a new bill for the amount due payable after 2 months. The bill was accepted by Alka. The new bill was duly met by Alka on maturity.

Record the necessary journal entries in the books of Rashmi and Alka and prepared Alka’s account in the books of Rashmi’s and Rashmi’s account in the books of Alka’s.

 

 

ANSWER:

Books of Rashmi

Journal

Date

 

Particulars

 

L.F.

Debit Amount Rs

Credit Amount Rs

2017

 

 

 

 

 

 

Feb.14

Alka

Dr.

 

7,500

 

 

 

To Sales A/c

 

 

 

7,500

 

(Goods sold to Alka)

 

 

 

 

 

 

 

 

 

 

 

Feb.14

Cash A/c

Dr.

 

500

 

 

Bills Receivable A/c

Dr.

 

7,000

 

 

 

To Alka

 

 

 

7,500

 

(Cash received Rs 500 and the bill accepted by Alka)

 

 

 

 

 

 

 

 

 

 

Apr.10

Alka

Dr.

 

7,000

 

 

 

To Bills Receivable A/c

 

 

 

7,000

 

(Alka got the bill cancelled)

 

 

 

 

 

 

 

 

 

 

 

Apr.10

Cash A/c

Dr.

 

2,000

 

 

 

 To Alka

 

 

 

2,000

 

(Received cash from Alka)

 

 

 

 

 

 

 

 

 

 

 

Apr.10

Alka

Dr.

 

500

 

 

 

To Interest A/c

 

 

 

500

 

(Interest charged on the amount due from Alka)

 

 

 

 

 

 

 

 

 

 

 

Apr.10

Bills Receivable A/c

Dr.

 

5,500

 

 

 

To Alka

 

 

 

5,500

 

(Alka’s acceptance payable of two months received)

 

 

 

 

 

 

 

 

 

 

 

June 13

Cash A/c

Dr.

 

5,500

 

 

 

To Bills Receivable A/c

 

 

 

5,500

 

(Alka’s acceptance met on due date)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ledger 

Alka’s Account

Dr.

 

 

 

 

 

 

Cr.

Date

Particulars

J.F.

Amount Rs

Date

Particulars

J.F.

Amount Rs

2017

 

 

 

2017

 

 

 

Feb.14

Sales

 

7,500

Feb.14

Cash

 

500

Apr.10

Bills Receivable

 

7,000

Feb.14

Bills Receivable

 

7,000

Apr.10

Interest

 

500

Apr.10

Cash

 

2,000

 

 

 

 

Apr.10

Bills Receivable

 

5,500

 

 

 

15,000

 

 

 

15,000

 

 

 

 

 

 

 

 

 

Books of Alka

Journal

Date

 

Particulars

 

L.F.

Debit Amount Rs

Credit Amount Rs

2017

 

 

 

 

 

 

Feb.14

Purchases A/c

Dr.

 

7,500

 

 

 

To Rashmi

 

 

 

7,500

 

(Goods bought from Rahsmi)

 

 

 

 

 

 

 

 

 

 

Feb.14

Rashmi

Dr.

 

7,500

 

 

 

To Cash A/c

 

 

 

500

 

 

To Bills Payable A/c

 

 

 

7,000

 

(Cash paid to Rashmi Rs 500 and a bill for Rs 7,000

drawn by Rashmi accepted)

 

 

 

 

 

 

 

 

 

 

Apr.10

Bills Payable A/c

Dr.

 

7,000

 

 

 

To Rashmi

 

 

 

7,000

 

(Bill cancelled before maturity)

 

 

 

 

 

 

 

 

 

 

 

Apr.10

Rashmi

Dr.

 

2,000

 

 

 

To Cash A/c

 

 

 

2,000

 

(Cash paid to Rashmi)

 

 

 

 

 

 

 

 

 

 

 

Apr.10

Interest A/c

Dr.

 

500

 

 

 

To Rashmi

 

 

 

500

 

(Interest due to Rashmi)

 

 

 

 

 

 

 

 

 

 

 

Apr.10

Rashmi

Dr.

 

5,500

 

 

 

To Bills Payable A/c

 

 

 

5,500

 

(Rashmi’s acceptance payable after two months

accepted)

 

 

 

 

 

 

 

 

 

 

 

June.13

Bills Payable A/c

Dr.

 

5,500

 

 

 

To Cash A/c

 

 

 

5,500

 

(The bill met on due date)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ledger

Rashmi’sAccount

Dr.

 

 

 

 

 

 

Cr.

Date

Particulars

J.F.

Amount Rs

Date

Particulars

J.F.

Amount Rs

2017

 

 

 

2017

 

 

 

Feb.14

Cash

 

500

Feb.14

Purchases

 

7,500

Feb.14

Bills Payable

 

7,000

Apr.10

Bills Payable

 

7,000

Apr.10

Cash

 

2,000

Apr.10

Interest

 

500

Apr.10

Bills Payable

 

5,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15,000

 

 

 

15,000

 

 

 

 

 

 

 

 

 

 

Page No 315:

Question 20:

Nikhil sold goods for Rs 23,000 to Akhil on Dec. 01, 2017. 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 Akhil’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 Akhil’s account in the books of Nikhil and Nikhil’s account in the books of Akhil.

 

 

ANSWER:

Books of Nikhil

Journal

Date

 

Particulars

 

L.F.

Debit Amount Rs

Credit Amount Rs

2017

 

 

 

 

 

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)

 

 

 

 

 

 

 

 

 

 

 

2018

 

 

 

 

 

 

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)

 

 

 

 

 

 

 

 

 

 

 

May 04

Cash A/c

Dr.

 

13,985

 

 

 

To Bills Receivable A/c

 

 

 

13,985

 

(The third bill met on due date)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Akhil’sAccount

Dr.

 

 

 

 

 

 

Cr.

Date

Particulars

J.F.

Amount Rs

Date

Particulars

J.F.

Amount Rs

2017

 

 

 

2017

 

 

 

Dec.01

Sales

 

23,000

Dec.01

Bills Receivable

 

23,000

2018

 

 

 

2018

 

 

 

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

 

 

 

 

 

 

 

 

 

Books of Akhil

Journal

Date

 

Particulars

 

L.F.

Debit Amount

Rs

Credit Amount

Rs

2017

 

 

 

 

 

 

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)

 

 

 

 

 

 

 

 

 

 

 

2018

 

 

 

 

 

 

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)

 

 

 

 

 

 

 

 

 

 

 

May 04

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

2017

 

 

 

2017

 

 

 

Dec.01

Bills Payable

 

23,000

Dec.01

Purchases

 

23,000

2018

 

 

 

2018

 

 

 

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

 

 

 

 

 

 

 

 

 

 

Page No 315:

Question 21:

On Jan 01, 2017 Vibha sold goods worth Rs 18,000 to Sudha and drew upon the latter a bill of exchange for the same amount payable after two months. Sudha accepted Vibha’s draft and returned the same to Vibha after acceptance. Vibha endorsed the bill immediately in favour of her creditor Geeta. Five days before the maturity of the bill Sudha requested Vibha to cancel the bill since she was short of funds. She further requested to draw a new bill upon her including interest of Rs 200. Vibha accepted Sudha’s request. Vibha took the bill from Geeta by making the payment to her in cash and cancelled the same. Then she drew a new bill upon Sudha as agreed. The new bill was payable after one month. The new bill was duly met by Sudha on maturity. Record the necessary journal entries in the books of Vibha.

 

 

ANSWER:

Books of Vibha

Journal

Date

 

Particulars

 

L.F.

Debit Amount Rs

Credit Amount Rs

2017

 

 

 

 

 

 

Jan.01

Sudha

Dr.

 

18,000

 

 

 

To Sales A/c

 

 

 

18,000

 

(Goods sold to Sudha)

 

 

 

 

 

 

 

 

 

 

 

Jan.01

Bills Receivable A/c

Dr.

 

18,000

 

 

 

To Sudha

 

 

 

18,000

 

(Sudha’s acceptance received)

 

 

 

 

 

 

 

 

 

 

 

Jan.01

Geeta

Dr.

 

18,000

 

 

 

To Bills Receivable A/c

 

 

 

18,000

 

(Sudha’s acceptance endorsed in favour of Geeta)

 

 

 

 

 

 

 

 

 

 

 

Feb.27

Sudha

Dr.

 

18,000

 

 

 

To Geeta

 

 

 

18,000

 

(Sudha cancelled the bill five days before the maturity)

 

 

 

 

 

 

 

 

 

 

 

Feb.27

Geeta

Dr.

 

18,000

 

 

 

To Cash A/c

 

 

 

18,000

 

(Cash paid to Geeta)

 

 

 

 

 

 

 

 

 

 

 

Feb.27

Sudha

 

 

200

 

 

 

To Interest A/c

 

 

 

200

 

(Interest credited to Sudha on account of

cancelling the bill )

 

 

 

 

 

 

 

 

 

 

 

Feb.27

Bills Receivable A/c

Dr.

 

18,200

 

 

 

To Sudha

 

 

 

18,200

 

(New bill received from Sudha)

 

 

 

 

 

 

 

 

 

 

 

Mar.02

Cash A/c

Dr.

 

18,200

 

 

 

To Sudha

 

 

 

18,200

 

(Shudha’s acceptance met on due date)

 

 

 

 

 

 

 

 

 

 

 

 

Page No 315:

Question 22:

Following was the position of debtor and creditor of Gautam as on 1.1.2017.

 

Debtors

Creditors

 

Rs

Rs

Babu

5,000

Chanderkala

8,000

Kiran

13,500

Anita

14,000

Anju

5,000

Sheiba

12,000

Manju

6,000

 

The following transactions took place in the month of Jan 2017:

Jan. 02

Drew on Babu at two months after date at full settlement for Rs 4,800. Babu accepted the bill and returned it on 5.1.2017.

Jan. 04

Babu’s bill discounted for Rs 4,750.

Jan. 08

Chanderkala sent a promissory note for Rs 8,000 payable three months after date.

Jan. 10

Promissory note received from Chanderkala discounted for Rs 7,900

Jan. 12

Accepted Sheiba draft for the amount due payable two months after date.

Jan. 22

Anita sent his promissory note payable after two months.

Jan. 23

Anita’s promissory note endorsed in favour of Manju.

Jan. 25

Accepted Anju’s draft payable after three months.

Jan. 29

 

Kiran sent Rs 2,000 in cash and a promissory note for the balance payable after three months. Record the above transactions in the proper subsidiary books.

 

 

 

 

ANSWER:

Bills Receivable Book

No.

Date of Bill

2017

Date Received 

2016

From whom 

of Bill

Drawer 

whom 

received

Acceptor

Where

Term 

Payable

Due date 

2016

L.F.

Amount

Rs

Cash 

Book 

Folio

Remarks

01

Jan.02

Jan.05

Babu

Self

Babu

 

2 months

Mar.05

 

4,800

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

4,800

 

 

 

 

Bills Payable Book

No.

Date of Bill

2017

To Whom

Given

Drawer

Payee

Where 

payable

Term

Due date 

2017

Ledger

Amount

Rs

Date 

paid

Cash 

Book 

Folio

Remarks

01

Jan.12

Sheiba

Sheiba

 

2 months

Mar.15

 

12,000

 

 

 

02

Jan.25

Anju

Anju

 

2 months

Apr.28

 

5,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

17,000

 

 

 

 

Cash Book

Dr.

 

 

 

 

 

 

 

 

Cr.

Date

Particulars

L.F.

Cash

Rs

Bank

Rs

Date

Particulars

L.F.

Cash

 Rs

Bank 

Rs

2017

 

 

 

 

2017

 

 

 

 

Jan.04

Bills Receivable

 

 

4,750

 

 

 

 

 

Jan.10

Bills Receivable

 

 

7,900

 

 

 

 

 

Jan.29

Kiran

 

2,000

 

Jan.31

Balance c/d

 

2,000

12,650

 

 

 

 

 

 

 

 

 

 

 

 

 

2,000

12,650

 

 

 

2,000

12,650

 

 

 

 

 

 

 

 

 

 

 

There is difference between Bills of Exchange and Promissory Note. In case of Promissory Note, parties are makers and payees. However, in Bills of Exchange parties are Drawer, drawee (acceptor) and payee on account difference Promissory Note has not been recorded in Bills Receivable and Bills Payable book.

 

 

 Books of Gautam

Journal

Date

 

Particulars

 

L.F.

Debit Amount Rs

Credit Amount Rs

2017

 

 

 

 

 

 

Jan.05

Discount Allowed A/c

Dr.

 

200

 

 

 

To Babu

 

 

 

200

 

(Babu’s acceptance received and allowed him

discount Rs 200)

 

 

 

 

 

 

 

 

 

 

Jan.04

Discount A/c

Dr.

 

50

 

 

 

To Bills Receivable A/c

 

 

 

50

 

(Babu’s acceptance discounted with a discount

charge of Rs 50)

 

 

 

 

 

 

 

 

 

 

 

Jan.08

Bills Receivable A/c

Dr.

 

8,000

 

 

 

To Chanderkala

 

 

 

8,000

 

(Promissory Note from Chanderkala received)

 

 

 

 

 

 

 

 

 

 

Jan.10

Discount A/c

Dr.

 

100

 

 

 

To Bills Receivable A/c

 

 

 

100

 

(Chanderkala’s Promissory Note discounted with bank

at discount of Rs 100)

 

 

 

 

 

 

 

 

 

 

Jan.22

Bills Receivable A/c

Dr.

 

14,000

 

 

 

To Anita

 

 

 

14,000

 

(Promissory Note received from Anita)

 

 

 

 

 

 

 

 

 

 

Jan.23

Manju

Dr.

 

14,000

 

 

 

To Bills Receivable A/c

 

 

 

14,000

 

(Anita’s Promissory Note endorsed to Manju)

 

 

 

 

 

 

 

 

 

 

 

Jan.29

Bills Receivable A/c

Dr.

 

11,500

 

 

 

To Kiran

 

 

 

11,500

 

(Promissory Note from Kiran received)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Page No 316:

Question 23:

On Jan. 01, 2017 Harsh accepted a month bill for Rs 10,000 drawn on him by tanu for latter’s benefit. Tanu discounted the bill on same day @ 8% p.a. On the due date tanu sent a cheque to Harsh for honour the bill. Harsh duly honoured his acceptance. Record the journal entries in the Books of Tanu and Harsh.

 

ANSWER:

Books of Tanu

Journal

Date

 

Particulars

 

L.F.

Debit Amount Rs

Credit Amount Rs

2017

 

 

 

 

 

 

Jan.01

Bills Receivable A/c

Dr.

 

10,000

 

 

 

To Harsh

 

 

 

10,000

 

(Harsh’s acceptance received)

 

 

 

 

 

 

 

 

 

 

 

Jan.01

Bank A/c

Dr.

 

9,933

 

 

Discount A/c

 

 

67

 

 

 

To Bills Receivable A/c

 

 

 

10,000

 

(Harsh’s acceptance discounted at 8% p.a.

for one month)

 

 

 

 

 

 

 

 

 

 

 

Feb.04

Harsha

Dr.

 

10,000

 

 

 

To Bank A/c

 

 

 

10,000

 

(Harsh’s account settled by paying amount

 due to Harsh through cheque)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Books of Harsh

Journal

Date

 

Particulars

 

L.F.

Debit Amount Rs

Credit Amount Rs

2017

 

 

 

 

 

Jan.01

Tanu

Dr.

 

10,000

 

 

 

To Bills Payable A/c

 

 

 

10,000

 

(Bill drawn by Tanu accepted)

 

 

 

 

 

 

 

 

 

 

 

Feb.04

Bank A/c

Dr.

 

10,000

 

 

 

To Tanu

 

 

 

10,000

 

(Cheque received from Tanu)

 

 

 

 

 

 

 

 

 

 

 

Feb.04

Bills Payable A/c

Dr.

 

10,000

 

 

 

To Bank A/c

 

 

 

10,000

 

(Bill drawn by Tanu met on due date)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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