class 11 accounts chapter 16 accounting for bill of exchange TS Grewal solution

 Ts grewal solution (2023-2024) | Class-11th | Chapter-16 | Accounting For Bills Of Exchange

Page No 16.35:

Question 1:

Calculate the due dates of the bills in the following cases:
 

Date of Bill		Tenure (Period)
(i)	1st December, 2018	60 Days
(ii)	30th April, 2019	2 Months
(iii)	28th January, 2019	1 Month
(iv)	23rd November, 2018	2 Months
(v)	29th May, 2018	4 Months

Answer:

 

Date of Bill	Tenure	Calculation	Due Date
(i) December 01, 2018	60 Days	30 (December) + 30 (January) + 3 days of grace	February 02, 2019
(ii) April 30, 2019	2 Months	2 Months from April 30, 2019 would be June 30, 2019 + 3 days of grace	July 03, 2019
(iii) January 28, 2019	1 Month	1 Month from January 28, 2019 would be February 28, 2019 + 3 days of grace	March 03, 2019
(iv) November 23, 2018	2 Months	2 Months from November 23, 2018 would be January 23, 2019 + 3 days of grace	January 26, 2019, but it is a national holiday so, due date would be one day before i.e., January 25, 2019
(v) May 29, 2018	4 Months	4 Months from May 29, 2019 would be September 29, 2019 + 3 days of grace	October 02, 2019 but it is a national holiday so, due date would be one day before i.e., October 01, 2019

 Page No 16.35:

Question 2:

On 10th March, 2019, A draws on B a bill at 3 months for  ` 20,000 which B accepts immediately and returns to A. The bill is honoured due date.
Pass necessary Journal entries in the books of both the parties.

Answer:

Journal in the books of A (Drawer)
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2019
Mar 10	Bills Receivable A/c	Dr.		20,000
	To B’s A/c				20,000
	(Bill received)
June 13	Cash A/c	Dr.		20,000
	To Bills Receivable A/c				20,000
	(Cash received against bill)

 

Journal in the books of B (Drawee)
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2019
Mar 10	A A/c	Dr.		20,000
	To Bills Payable A/c				20,000
	(Bill accepted)
June 13	Bills Payable A/c	Dr.		20,000
	To Cash A/c				20,000
	(Cash paid against bill)

Page No 16.35:

Question 3:

On 1st January, 2019, A sold goods to B for  ` 5,000 plus IGST @ 18%. A received  ` 900 by cheque from B and drew on him a bill for the balance amount payable 3 months after date. The bill was duly accepted by B. A retained the bill till due date. On due date, the bill was paid.
Pass Journal entries in the books of A and B. Also, show necessary accounts in the books of both the parties.

Answer:

Books of A
Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2019
Jan.01	B	Dr.		5,900
	To Sales A/c To Output IGST A/c				5,000 900
	(Goods sold to B plus IGST @ 18%)
Jan.01	Bills Receivable A/c Bank A/c	Dr. Dr.		5,000 900
	To B				5,000
	(B accepted the bill and paid IGST by cheque)
Apr.04	Cash A/c	Dr.		5,000
	To Bills Receivable A/c				5,000
	(Amount of bill received on its maturity)

 

Books of B
Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2019
Jan.01	Purchases A/c Input IGST A/c	Dr. Dr.		5,000 900
	To A				5,900
	(Goods bought from A plus IGST @ 18%)
Jan.01	A	Dr.		5,900
	To Bills Payable A/c To Bank A/c				5,000 900
	(Bill drawn by A accepted and IGST paid by cheque)
Apr.04	Bills Payable A/c	Dr.		5,000
	To Cash A/c				5,000
	(Payment of bill was made on its due date )

 Page No 16.35:

Question 4:

Vinod sold goods to Darbara Singh for  ` 1,000 on 1st January, 2019. He drew on the latter a bill for the amount payable 3 months after date.He discounted the bill with his bank for  ` 990 on 4th January, 2019. On maturity, the bill is duly met. Make the Journal entries in the books of Vinod and Darbara Singh.

Answer:

Books of Vinod
Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2019
Jan.1	Darbara Singh	Dr.		1,000
	To Sales A/c				1,000
	(Goods sold to Darbara Singh)
Jan.1	Bills Receivable A/c	Dr.		1,000
	To Darbara Singh				1,000
	(Bills accepted by Darbara Singh)
Jan.4	Bank A/c	Dr.		990
	Discount Charges A/c	Dr.		10
	To Bills Receivable A/c				1,000
	(Darbara Singh’s acceptance discounted at 9% p.a. for 3 month)

 

Books of Darbara Singh
Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2019
Jan.1	Purchases A/c	Dr.		1,000
	To Vinod				1,000
	(Goods bought from Vinod )
Jan.1	Vinod	Dr.		1,000
	To Bills Payable A/c				1,000
	(Bill drawn by Vinod accepted)
Mar.4	Bills Payable A/c	Dr.		1,000
	To Bank A/c				1,000
	(Payment of bill was made on its due date.)

Page No 16.36:

Question 5:

On 1st January, 2019, X sold goods of  ` 20,000 to Y and drew a bill on Y at three months for the amount. Y accepted the bill. The bill is met on maturity. Pass the necessary Journal entries in the books of X and Y, if X discounted the bill @ 12% p.a. from bank on 4th January.

Answer:

In the books  of X
Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2019
January 01	Y’s A/c	Dr.		20,000
	To Sales A/c				20,000
	(Being goods sold to Y on credit)
January 01	Bills Receivable A/c	Dr.		20,000
	To Y’s A/c				20,000
	(Being bill drawn on Y for three months)
January 04	Bank A/c	Dr.		19,400
	Discounting Charges A/c	Dr.		600
	To Bills Receivable A/c				20,000
	(Being bill discounted with bank and charges paid @12% p.a.)

 

Working Notes:

Discounting Charges =  ` (20,000 × 12/100 × 3/12) =  ` 600

In the books  of Y
Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2019
Jan. 01	Purchases A/c	Dr.		20,000
	To X’s A/c				20,000
	(Being goods purchased from X on credit)
Jan. 01	X’s A/c	Dr.		20,000
	To Bills Payable A/c				20,000
	(Being acceptance given to X)
April 04	Bills Payable A/c	Dr.		20,000
	To Bank A/c				20,000
	(Being bill paid on maturity)

Page No 16.36:

Question 6:

Dinesh received from Shridhar an acceptance for  ` 3,000 on 1st September, 2018 at 3 months. Dinesh got the acceptance discounted at 9% p.a. from his bank. On the due date, Shridhar paid the required amount.
Give the Journal entries in the books of Dinesh and Shridhar.

Answer:

Books of Dinesh
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2018
Sep.01	Bills Receivable A/c	Dr.		3,000
	To Shridhar				3,000
	(Shridhar acceptance was received)
Sep.01	Bank A/c	Dr.		2,932.50
	Discount Charges A/c	Dr.		67.50
	To Bills Receivable A/c				3,000
	(Shridhar’s acceptance was discounted with bank)

 

Books of Shridhar
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2018
Sep.01	Dinesh	Dr.		3,000
	To Bills Payable A/c				3,000
	(Bills drawn by Shridhar accepted)
Dec.04	Bills Payable A/c	Dr.		3,000
	To Bank A/c				3,000
	(Shridhar’s acceptance discharged on its due date)

 Page No 16.36:

Question 7:

A sells goods of  ` 10,000 on 1st March, 2019 to B on credit. B accepts a bill on the same date for the amount payable three months after date. A discounts the bill at 6% p.a. from bank on 4th April. On maturity, the bill  is met by B. Pass the necessary Journal entries in the books of both the parties.

Answer:

In the books  of A
Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2019
March 01	B’s A/c	Dr.		10,000
	To Sales A/c				10,000
	(Being goods sold to B on credit)
March 01	Bills Receivable A/c	Dr.		10,000
	To B’s A/c				10,000
	(Being bill drawn on B for three months)
April 04	Bank A/c	Dr.		10,000
	Discounting Charges A/c	Dr.		100
	To Bills Receivable A/c				9,900
	(Being bill discounted with bank and charges paid @6% p.a.)

 

Working Notes:

Discounting Charges =  ` (10,000 × 6/100 × 2/12) =  ` 100

In the books  of B
Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2019
March 01	Purchases A/c	Dr.		10,000
	To A’s A/c				10,000
	(Being goods purchased from A on credit)
March 01	A’s A/c	Dr.		10,000
	To Bills Payable A/c				10,000
	(Being acceptance given to A)
June 04	Bills Payable A/c	Dr.		10,000
	To Bank A/c				10,000
	(Being bill paid on maturity)

Page No 16.36:

Question 8:

A drew a bill of  ` 1,000 on B for 3 months which was duly accepted by the latter. A endorsed the bill to C in full payment of his own acceptance to C for a like amount. C endorsed the bill to B.
Pass the Journal entries in the books of A, B and C.

Answer:

Books of A
Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	Bills Receivable A/c	Dr.		1,000
	To B				1,000
	(B’s acceptance was received)
	C	Dr.		1,000
	To Bills Receivable A/c				1,000
	(B’s acceptance endorsed in favour of C)

 

Books of B
Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	A	Dr.		1,000
	To Bills Payable A/c				1,000
	(Bill drawn by A was accepted)
	Bills Payable A/c	Dr.		1,000
	To Bills Receivable A/c				1,000
	(Amount owed from C was settled by Bill Payable)

 

 

Books of C
Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	Bills Receivable A/c	Dr.		1,000
	To A				1,000
	(Bills Receivable was received from A)
	B	Dr.		1,000
	To Bills Receivable A/c				1,000
	(Amount owed to B was settled by Bills Receivable)

Page No 16.36:

Question 9:

A owed B  ` 8,000. He gave a bill for the same on 1st August, 2018 payable after 4 months at the Bank of India, Chandni Chowk, Delhi. Immediately after receiving the bill, B endorsed it to C in payment of his debt. On 1st September, C discounted the bill at 12% p.a. The bill is met on due date.
Pass the necessary Journal entries in the books of A, B and C.

Answer:

Books of A
Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2018
Aug.01	B	Dr.		8,000
	To Bills Payable A/c				8,000
	(Bill drawn by B was accepted)
Dec.04	Bills Payable A/c	Dr.		8,000
	To Bank A/c				8,000
	(Payment made to meet the bill on its maturity)

 

Books of B
Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2018
Aug 01	Bills Receivable A/c	Dr.		8,000
	To A				8,000
	(A’s acceptance was received)
Aug 01	C	Dr.		8,000
	To Bills Receivable A/c				8,000
	(A’s acceptance endorsed in favour of C)

 

Books of C
Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2018
Aug 01	Bills Receivable A/c	Dr.		8,000
	To B				8,000
	(Bills Receivable was received from B)
Sep 01	Bank A/c	Dr.		7,760
	Discount Charges A/c	Dr.		240
	To Bills Receivable A/c				8,000
	(Bill discount at 12% p.a. for 3 months)

 

Working Note:

Calculation of Discount= Amount of Bill×Rate/100×Maturity period/12

                                    =8,000×12/100×3/12= Rs. 240

Page No 16.36:

Question 10:

A sold goods to B for  ` 20,000 plus CGST and SGST @ 9% each on credit 3 months. B paid A  ` 3,600 by cheque and accepted a draft for the balance amount. The draft was endorsed in favour of C, who got the payment on maturity.
Give Journal entries in the books of A.

Answer:

Books of A
Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
	B	Dr.		23,600
	To Sales A/c To Output CGST A/c To Output SGST A/c				20,000 1,800 1,800
	(Goods sold to B plus CGST and SGST @ 9% each)
	Bills Receivable A/c Bank A/c	Dr. Dr.		20,000 3,600
	To B				23,600
	(B accepted the bill and paid GST by cheque)
	C	Dr.		20,000
	To Bills Receivable A/c				20,000
	(B’s acceptance endorsed in favour of C)

 Page No 16.36:

Question 11:

Mohan Singh draws a bill on Jagat for  ` 1,000 payable 2 months after date. Immediately after its acceptance, Mohan Singh sends the bill to his bank for collection. On due date, bank gets the payment. Make the entries in the books of all the parties.

Answer:

Books of Mohan Singh
Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	Bills Receivable A/c	Dr.		1,000
	To Jagat				1,000
	(Jagat acceptance was received)
	Bills Sent for Collection A/c	Dr.		1,000
	To Bills Receivable A/c				1,000
	(Bill Receivable sent to bank for collection)
	Bank A/c	Dr.		1,000
	To Bills Sent for Collection A/c				1,000
	(Payment of bill received by bank)

 

Books of Jagat
Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	Mohan Singh	Dr.		1,000
	To Bills Payable A/c				1,000
	(Bills drawn by Mohan Singh was accepted)
	Bills Payable A/c	Dr.		1,000
	To Bank A/c				1,000
	(Payment was made to meet the bill)

 Page No 16.36:

Question 12:

X draws on Y a bill for  ` 4,000 which was duly accepted by Y. Y meets the bill on its due date. Show what entries would be passed in the books of X under each of the following circumstances:
(a) If X retains the bill till due date.
(b) If X discounts the same with his banker paying  ` 100 for discount.
(c) If X endorses the same to his creditor Z in full settlement of his debt of  ` 4,080.
(d) If X sends the bill to his banker for collection the next day.

Answer:

Case (a)

Books of X
Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	Bills Receivable A/c	Dr.		4,000
	To Y				4,000
	(Y’s acceptance was received)
	Cash A/c	Dr.		4,000
	To Bills Receivable A/c				4,000
	(Amount of bill received on its maturity)

 

Case (b)

Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	Bills Receivable A/c	Dr.		4,000
	To Y				4,000
	(Y’s acceptance was received)
	Bank A/c	Dr.		3,900
	Discount Charges A/c	Dr.		100
	To Bills Receivable A/c				4,000
	(Y’s acceptance discount with bank)

 

Case (c)

Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	Bills Receivable A/c	Dr.		4,000
	To Y				4,000
	(Y’s acceptance was received)
	Z	Dr.		4,080
	To Discount Received A/c				80
	To Bills Receivable A/c				4,000
	(Y’s acceptance endorsed in favour of Z and discount allowed by Z is Rs 80)

 

Case (d)

Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	Bills Receivable A/c	Dr.		4,000
	To Y				4,000
	(Y’s acceptance was received)
	Bills Sent for Collection A/c	Dr.		4,000
	To Bills Receivable A/c				4,000
	(Y’s acceptance sent to bank for collection)
	Bank A/c	Dr.		4,000
	To Bills Sent for Collection A/c				4,000
	(Y’s acceptance net on maturity)

Page No 16.36:

Question 13:

Ram draws a bill for  ` 2,000 on Shyam on 15th September, 2018 for 3 months. On maturity, Shyam failed to honour th bill.
Pass the necessary Journal entries in the books of Ram and Shyam.

Answer:

Books of Ram
Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2018
Sep.15	Bills Receivable A/c	Dr.		2,000
	To Shyam				2,000
	(Shyam’s acceptance received)
Dec.18	Shyam A/c	Dr.		2,000
	To Bills Receivable A/c				2,000
	(Shyam’s acceptance dishonoured)

 

Books of Shyam
Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2018
Sep.15	Ram	Dr.		2,000
	To Bills Payable A/c				2,000
	(Bill drawn by Ram was accepted)
Dec.18	Bills Payable A/c	Dr.		2,000
	To Ram				2,000
	(Bills Payable dishonoured)

 Page No 16.37:

Question 14:

On 20th March, 2019, Naresh sold goods to Kailash to the value of  ` 1,250, taking a bill at 3 months for the amount. On maturity, the bill was dishonoured. Naresh paid  ` 10 as noting charges. On 1st July, Kailash cleared his account by paying  ` 1,260.
Make the entries in the books of both the parties to record the above transactions.

Answer:

Books of Naresh
Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2019
Mar.20	Kailash	Dr.		1,250
	To Sales A/c				1,250
	(Goods sold to Kailash)
Mar.20	Bills Receivable A/c	Dr.		1,250
	To Kailash				1,250
	(Kailash’s acceptance was received)
Jun.23	Kailash	Dr.		1,260
	To Bills Receivable A/c				1,250
	To Cash A/c				10
	(Bill received from Kailash dishonoured and Rs 10 paid for Noting the bill)
July 01	Cash A/c	Dr.		1,260
	To Kailash				1,260
	(Received cash from Kailash)

 

Books of Kailash
Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2019
Mar.20	Purchases A/c	Dr.		1,250
	To Naresh				1,250
	(Goods were bought from Naresh )
Mar.20	Naresh	Dr.		1,250
	To Bills Payable A/c				1,250
	(Bill drawn by Naresh was accepted)
Jun.23	Bills Payable A/c	Dr.		1,250
	Noting Charges A/c	Dr.		10
	To Naresh				1,260
	(Bill Payable was dishonoured)
July 01	Naresh	Dr.		1,260
	To Cash A/c				1,260
	(Paid cash to Naresh)

 Page No 16.37:

Question 15:

On 1st January, 2019, X sold goods to Y for  ` 25,000 and immediately received from Y  ` 10,000 by cheque and drew a bill on Y at three months for the balance amount. Bill is accepted by Y. Bill was dishonoured on the due date and Y paid  ` 150 as noting charges. Ten days later, Y pays the due amount to X. Pass the Journal entries in the books of both the parties.

Answer:

In the books  of X
Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2019
Jan. 01	Y’s A/c	Dr.		25,000
	To Sales A/c				25,000
	(Being goods sold to Y on credit)
Jan. 01	Bills Receivable A/c	Dr.		15,000
	Bank A/c	Dr.		10,000
	To Y’s A/c				25,000
	(Being bill drawn on Y for three months and part payment received)
April 04	Y’s A/c	Dr.		15,000
	To Bills Receivable A/c				15,000
	(Being bill dishonoured by Y)
April 14	Bank A/c	Dr.		15,000
	To Y’s A/c				15,000
	(Being amount due paid by Y after 10 days)

 

In the books  of Y
Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2019
Jan. 01	Purchases A/c	Dr.		25,000
	To X’s A/c				25,000
	(Being goods purchased from X on credit)
Jan. 01	X’s A/c	Dr.		25,000
	To Bank A/c				10,000
	To Bills Payable A/c				15,000
	(Being acceptance given to X and part payment given)
April 04	Bills Payable A/c	Dr.		15,000
	Noting Charges A/c	Dr.		150
	To X’s A/c				15,000
	To Cash A/c				150
	(Being bill dishonoured and noting charges paid)
April 14	X’s A/c	Dr.		15,000
	To Bank A/c				15,000
	(Being due amount paid to X)

Page No 16.37:

Question 16:

On 1st July, 2019, A drew a bill for  ` 5,000 on B payable after 3 months. A discounted it with the Bank for  ` 4,850. On maturity, B failed to pay the amount of his acceptance and the bank had to pay  ` 50 as noting charges.
Pass the necessary Journal entries in the books of A and B.

Answer:

Books of A
Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2019
Jul.01	Bills Receivable A/c	Dr.		5,000
	To B				5,000
	(B’s acceptance was received)
Jul.01	Bank A/c	Dr.		4,850
	Discount Charges A/c	Dr.		150
	To Bills Receivable A/c				5,000
	(B’s acceptance discounted with bank)
Oct.04	B	Dr.		5,050
	To Bank A/c				5,050
	(B’s acceptance became dishonoured, bank paid Noting Charges Rs 50)

 

Books of B
Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2019
Jul.01	A	Dr.		5,000
	To Bills Payable A/c				5,000
	(Bill drawn by A was accepted)
Oct.04	Bills Payable A/c	Dr.		5,000
	Noting Charges A/c	Dr.		50
	To A				5,050
	(Bills Payable dishonoured)

Page No 16.37:

Question 17:

On 15th June, 2019, Mohan sold goods to Sohan valued at  ` 2,000. He drew a bill at 3 months for the amount and discounted the same with his bank for  ` 1,960. On the due date the bill was dishonoured and Mohan paid to the bank the amount due plus the noting charges of  ` 10.
Draft the Journal entries in the books of all parties.

Answer:

Books of Mohan
Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2019
June 15	Sohan	Dr.		2,000
	To Sales A/c				2,000
	(Goods sold to Sohan)
June 15	Bills Receivable A/c	Dr.		2,000
	To Sohan				2,000
	(Sohan’s acceptance was received)
June 15	Bank A/c	Dr.		1,960
	Discount Charges A/c	Dr.		40
	To Bills Receivable A/c				2,000
	(Sohan’s acceptance discounted with bank)
Sep.18	Sohan	Dr.		2,010
	To Bank A/c				2,010
	(Sohan’s acceptance became dishonoured and Bank paid Rs 10 Noting Charges)
Sep.18	Bank A/c	Dr.		2,010
	To Cash A/c				2,010
	(Liabilities on account bill dishonoured was discharged)

 

Books of Sohan
Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2019
June 15	Purchases A/c	Dr.		2,000
	To Mohan				2,000
	(Goods were bought from Sohan)
June 15	Mohan	Dr.		2,000
	To Bills Payable A/c				2,000
	(Bills drawn by Mohan was accepted)
Sep.18	Bills Payable A/c	Dr.		2,000
	Noting Charges A/c	Dr.		10
	To Mohan				2,010
	(Bills Payable became dishonoured)

 Page No 16.37:

Question 18:

On 1st March, 2019, R accepted a Bill of Exchange of  ` 20,000 from S payable 3 months after date in full settlement of his dues. On the same day S endorsed the Bill of Exchange to T together with a cheque for  ` 5,000 in settlement of his debt to the latter. On 2nd March, 2019, T discounted the Bill of Exchange @ 6% p.a. with his bank. On maturity the Bill of Exchange was dishonoured.
Journalise the transactions in the books of R and T.

Answer:

Books of R
Journal
Date	Particulars			L.F.	Debit Amount ( `)	Credit Amount ( `)
2019
Mar.01	S	Dr.			20,000
	To Bills Payable A/c					20,000
	(Bill drawn by S was accepted)
June 04	Bills Payable A/c		Dr.		20,000
	To S					20,000
	(Bills Payable dishonoured)

 

Books of T
Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2019
Mar.01	Bank A/c	Dr.		5,000
	Bills Receivable A/c	Dr.		20,000
	To S				25,000
	(Bill Receivable and cheque received from S)
Mar.02	Bank A/c	Dr.		19,700
	Discount Charges A/c	Dr.		300
	To Bills Receivable A/c				20,000
	(R’s acceptance discounted with bank at 6% p.a. for 3 months)
June 04	S	Dr.		20,000
	To Bank A/c				20,000
	(Bill received from S was dishonoured)

 Page No 16.37:

Question 19:

On 1st January, 2019, A drew a bill on B for  ` 10,000 payable after 3 months. B accepted the bill and returned it to A. After 10 days, A endorsed the bill to his creditor C. On the due date, the bill was dishonoured and C paid  ` 50 as noting charges.
Record the transactions in the books of A, B and C.

Answer:

Books of A
Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2019
Jan. 01	Bills Receivable A/c	Dr.		10,000
	To B				10,000
	(B’s acceptance was received)
Jan. 11	C	Dr.		10,000
	To Bills Receivable A/c				10,000
	(B’s acceptance endorsed in favour of C)
April 04	B	Dr.		10,050
	To C				10,050
	(Bill endorsed in favour of C was dishonoured and C paid Rs 50 Noting Charges)

 

Books of B
Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2019
Jan. 01	A	Dr.		10,000
	To Bills Payable A/c				10,000
	(Being Bill drawn by A was accepted )
April 04	Bills Payable A/c	Dr.		10,000
	Noting Charges A/c	Dr.		50
	To A				10,050
	(Being Bill Payable dishonoured)

 

Books of C
Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2019
Jan.11	Bills Receivable A/c	Dr.		10,000
	To A				10,000
	(Being Bill Receivable received from A)
April 04	A	Dr.		10,050
	To Bills Receivable A/c				10,000
	To Cash A/c				50
	(Being Bill Receivable received from A became dishonoured and Noting Charge paid Rs 50)

 Page No 16.37:

Question 20:

Y owes X  ` 4,000. On 1st January, 2019, Y accepts a 3 months bill for  ` 3,900 in satisfaction of his full claim. On the same date, it was endorsed by X to Z in satisfaction of his claim of  ` 3,980. The bill is dishonoured on the due date. Give the Journal entries in the books of X.

Answer:

Books of X
Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2019
Jan.01	Bills Receivable A/c	Dr.		3,900
	Discount Allowed A/c	Dr.		100
	To Y				4,000
	(Y’s acceptance received in full settlement of amount due from him and allowed with discount)
Jan.01	Z	Dr.		3,980
	To Bills Receivable A/c				3,900
	To Discount Received A/c				80
	(Y’s acceptance endorsed in favour of Z  and discount received)
Mar.04	Y	Dr.		4,000
	Discount Received A/c                           Dr.			80
	To Z				3,980
	To Discount Allowed A/c				100
	(Y’s acceptance was endorsed to Z, now dishonoured)

Page No 16.37:

Question 21:

On 1st January, 2019, A draws a bill on B for  ` 1,000 payable after 3 months. Immediately after its acceptance, A sends the bill to his bank for collection. On the due date, the bill was dishonoured. Record the transactions in the Journals of A and B.

Answer:

Books of A
Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2019
Jan.01	Bills Receivable A/c	Dr.		1,000
	To B				1,000
	(B’s acceptance was received)
Jan.01	Bills Sent for Collection A/c	Dr.		1,000
	To Bills Receivable A/c				1,000
	(B’s acceptance sent to bank for Collection)
April 04	B	Dr.		1,000
	To Bills Sent for Collection A/c				1,000
	(B’s acceptance became dishonoured)

 

Books of B
Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2019
Jan.01	A	Dr.		1,000
	To Bills Payable A/c				1,000
	(Bill drawn by A was accepted)
April 04	Bills Payable A/c	Dr.		1,000
	To A				1,000
	(Bills Payable to A became dishonoured)

 Page No 16.37:

Question 22:

A bill for  ` 1,000 is drawn by A on B and accepted by the latter payable at the New Delhi, Bank of India. Show what entries should be passed in the books of A under each of the following circumstances:
(a) If A retained the bill till the due date and then realized it on maturity.
(b) If A discounted it with his bank for  ` 950.
(c) If A endorsed it to his creditor C in full settlement of his debt.
(d) If A sent it to his bank for collection.
Also, give the necessary entries in each of the cases if the bill is dishonoured.

Answer:

(a)

Books of A
Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
	Bills Receivable A/c	Dr.		1,000
	To B				1,000
	(B’s acceptance was received)
	On honouring of the bill
	Bank A/c	Dr.		1,000
	To Bills Receivable A/c				1,000
	(B’s acceptance honoured)
	On dishonour of the bill
	B	Dr.		1,000
	To Bills Receivable A/c				1,000
	(B’s acceptance dishonoured)

 

(b)

Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
	Bills Receivable A/c	Dr.		1,000
	To B				1,000
	(Bills Receivable received from B)
	Bank A/c	Dr.		950
	Discount Charges A/c	Dr.		50
	To Bills Receivable A/c				1,000
	(Bill acceptance discounted with bank)
	On dishonour of the bill
	B	Dr.		1,000
	To Bank A/c				1,000
	(B’s acceptance dishonoured)

 

(c)

Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
	Bills Receivable A/c	Dr.		1,000
	To B				1,000
	(B’s acceptance was received)
	C	Dr.		1,000
	To Bills Receivable A/c				1,000
	(B’s acceptance endorsed in favour of C)
	On dishonour of the bill			1,000
	B	Dr.			1,000
	To C
	(B’s acceptance which had transferred to C now became dishonoured)

 

(d)

Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
	Bills Receivable A/c	Dr.		1,000
	To B				1,000
	(B’s acceptance was received)
	Bills Sent to Bank for Collection A/c	Dr.		1,000
	To Bills Receivable A/c				1,000
	(Bill Sent to bank for collection)
	On dishonour of Bill
	B	Dr.		1,000
	To Bill Sent to Bank for Collection A/c				1,000
	(B’s acceptance dishonoured)

 Page No 16.37:

Question 23:

On 1st January, 2019 for goods sold, Ramesh drew a Bill of Exchange on Mahesh for  ` 4,000, for a period of 3 months. Mahesh accepts it and returns to Ramesh. Ramesh then endorses it to Mukesh who in turn endorses it to Suresh on 1st February, 2019. The bill is then discounted by Suresh on the same date with his bank at 5% p.a. On the due date the bill is dishonoured.
Pass the necessary Journal entries in the books of all the four parties.

Answer:

Books of Ramesh
Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2019
Jan.01	Mahesh	Dr.		4,000
	To Sales A/c				4,000
	(Goods were sold to Mahesh)
Jan.01	Bills Receivable A/c	Dr.		4,000
	To Mahesh				4,000
	(Mahesh’s acceptance was received)
Jan.01	Mukesh	Dr.		4,000
	To Bills Receivable A/c				4,000
	(Mahesh’s acceptance was endorsed in favour of Mukesh)
April 04	Mahesh	Dr.		4,000
	To Mukesh				4,000
	(Mahesh’s acceptance was dishonoured)

 

Books of Mahesh
Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2019
Jan.01	Purchases A/c	Dr.		4,000
	To Ramesh				4,000
	(Goods were bought from Ramesh)
Jan.01	Ramesh	Dr.		4,000
	To Bills Payable A/c				4,000
	(Bill drawn by Ramesh was accepted)
April 04	Bills Payable A/c	Dr.		4,000
	To Ramesh				4,000
	(Bill Payable was dishonoured)

 

Books of Mukesh
Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2019
Jan.01	Bills Receivable A/c	Dr.		4,000
	To Ramesh				4,000
	(Bill received from Ramesh)
Feb.01	Suresh	Dr.		4,000
	To Bills Receivable A/c				4,000
	(Bills which had received from Suresh, endorsed to Suresh)
April 04	Ramesh	Dr.		4,000
	To Suresh				4,000
	(Being Bill received from Ramesh was dishonoured)

 

Books of Suresh
Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2019
Feb.01	Bills Receivable A/c	Dr.		4,000
	To Mukesh				4,000
	(Being Bill Receivable received from Mukesh)
Feb.01	Bank A/c	Dr.		3,967
	Discount Charges A/c	Dr.		33
	To Bills Receivable A/c				4,000
	(Being Bill discount with bank at 5% p.a. for two months)
April 04	Mukesh	Dr.		4,000
	To Bank A/c				4,000
	(Being Bill received from Mukesh was dishonoured)

Page No 16.38:

Question 24:

A purchases goods worth  ` 6,200 from B and gives him his acceptance for  ` 6,000 in full satisfaction. B purchases goods worth  ` 10,000 from C and endorses the bill to him, paying the balance by cheque. On maturity the bill is dishonoured, noting charges amounted to  ` 100.
Give the Journal entries in the books of A, B and C.

Answer:

Books of A
Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	Purchases A/c	Dr.		6,200
	To B				6,200
	(Being Goods purchased from B)
	B	Dr.		6,200
	To Bills Payable A/c				6,000
	To Discount Received A/c				200
	(Being Bill drawn by B accepted and discount allowed by him)
	Bills Payable A/c	Dr.		6,000
	Discount Received A/c	Dr.		200
	Noting Charges A/c	Dr.		100
	To B				6,300
	(Being Bill payable dishonoured)

 

Books of B
Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	A	Dr.		6,200
	To Sales A/c				6,200
	(Being Good sold to A)
	Bills Receivable A/c	Dr.		6,000
	Discount Allowed A/c	Dr.		200
	To A				6,200
	(Being B’s acceptance received and discount allowed)
	Purchases A/c	Dr.		10,000
	To C				10,000
	(Being Goods bought from C)
	C	Dr.		10,000
	To Bills Receivable A/c				6,000
	To Bank A/c				4,000
	(Being Bills Receivable and Cheque given to C to settle due)
	A	Dr.		6,300
	To C				6,100
	To Discount Allowed A/c				200
	(Being Bill accepted by B was dishonoured and C paid Rs 100 as Noting Charges)

 

Books of C
Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	B	Dr.		10,000
	To Sales A/c				10,000
	(Being Goods sold to B)
	Bills Receivable A/c	Dr.		6,000
	Bank A/c	Dr.		4,000
	To B				10,000
	(Being Bill Receivable and Cheque received from B)
	B	Dr.		6,100
	To Bills Receivable A/c				6,000
	To Cash A/c				100
	(Being Bills Receivable received from B dishonoured and Rs 100 paid for noting the bill)

Page No 16.38:

Question 25:

X sells goods for  ` 40,000 to Y on 1st January, 2019 and on the same day draws a bill on Y at three months for the amount. Y accepts it and returns it to X, who discounted it on 4th January, 2019 with his bank at 6% p.a. The acceptance is dishonoured on the due date and the noting charges were paid by bank being  ` 200.
On 4th April, 2019, Y accepts a new bill at three months for the amount then due to X together with interest at 12% p.a.
Make Journal entries to record these transactions in the books of X.

Answer:

X’s Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2019
Jan.01	Y A/c	Dr.		40,000
	To Sales A/c				40,000
	(Being Goods sold on credit to Y)
Jan.01	Bills Receivable A/c	Dr.		40,000
	To Y A/c				40,000
	(Being Acceptance received from Y)
Jan.04	Bank A/c	Dr.		39,400
	Discounting Charges A/c	Dr.		600
	To Bills Receivable A/c				40,000
	(Being Bill discounted at 6% p.a.)
Apr.04	Y A/c (40,000+200)	Dr.		40,200
	To Bank A/c				40,200
	(Being Bill dishonoured and noting charges of Rs 200 paid by bank)
Apr.04	Y A/c	Dr.		1,206
	To Interest A/c				1,206
	(Being Interest due for three months from Y on renewal of bill)
Apr.04	Bills Receivable (New) A/c (40,200+1,206)	Dr.		41,406
	To Y A/c				41,406
	(Being Acceptance received from Y)

 

Working Notes:

WN 1: Amount of Discounting Charges=40,000×6×3100×12=Rs 200

WN 2: Amount of Interest on Renewal of Bill=40,200×12×3100×12=Rs 1,206

Page No 16.38:

Question 26:

Ram owes  ` 2,000 to Mohan on 1st January, 2019. On this date, he accepted a draft for the amount for 3 months. Mohan got the bill discounted at his bank @ 6% p.a. On the due date, the bill was dishonured, nothing charges  ` 20. Ram agreed to pay  ` 520 immediately and accept another bill for the remaining amount for 3 months together with interest at 9% p.a. This bill was met on the due date. Give the Journal entries in the books of both the parties.

Answer:

Books of Mohan
Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2019
Jan.01	Bills Receivable A/c	Dr.		2,000
	To Ram				2,000
	(Being Ram’s acceptance received)
Jan.01	Bank A/c	Dr.		1,970
	Discount Charges A/c	Dr.		30
	To Bills Receivable A/c				2,000
	(Being Ram’s acceptance was discounted at 6% p. a. for 3 months)
April 04	Ram	Dr.		2,020
	To Bank				2,020
	(Being Ram’s acceptance which was discounted with bank dishonoured)
April 04	Cash A/c	Dr.		520
	To Ram				520
	(Being Cash received from Ram)
April 04	Ram	Dr.		34
	To Interest A/c				34
	(Being Interest due from on amount outstanding at 9% p. a. for 3 months)
	Working Note: Interest = 1,500 × 9% × 3/12 = Rs 34
April 04	Bill Receivable A/c	Dr.		1,534
	To Ram				1,534
	(Being Ram’s acceptance received for outstanding amount including interest)
April 04	Cash A/c	Dr.		1,534
	To Bills Receivable A/c				1,534
	(Being Cash received on honouring of bill)

 

Books of Ram
Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2019
Jan.01	Mohan	Dr.		2,000
	To Bills Payable A/c				2,000
	(Being Bill drawn by Mohan was accepted)
April 04	Bills Payable A/c	Dr.		2,000
	Noting Charges A/c	Dr.		20
	To Mohan				2,020
	(Being Bill dishonoured on its due date)
April 04	Mohan	Dr.		520
	To Cash A/c				520
	(Being Cash paid to Mohan)
April 04	Interest A/c	Dr.		34
	To Mohan				34
	(Being Interest due to Mohan on outstanding balance for 3 months)
April 04	Mohan	Dr.		1,534
	To Bills Payable A/c				1,534
	(Being Bill accepted for the amount outstanding including interest to Mohan)
April 04	Bills Payable A/c	Dr.		1,534
	To Cash A/c				1,534
	(Being Bill discharged on maturity)

Page No 16.38:

Question 27:

On 15th June, 2019, X sold to Y goods to the value of  ` 15,000 drawing upon the latter two bills, one for  ` 10,000 payable 2 months after date and other for  ` 5,000 payable 3 months after date, X discounted the first bill with his bank at 6% p.a. and endorsed the second bill in favour of his creditor, Z. The first bill was met on maturity but the second was dishonoured. Z paid  ` 50 as noting charges. On 1st October, Y cleared his account to X by paying  ` 5,100 which included  ` 50 as interest.
Record the necessary Journal entries in the books of both X and Y.

Answer:

Books of X
Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2019
June 15	Y	Dr.		15,000
	To Sales A/c				15,000
	(Goods were sold to Y)
June 15	Bills Receivable A/c (Bill no 1)	Dr.		10,000
	Bills Receivable A/c (Bill no 2)	Dr.		5,000
	To Y				15,000
	(Y’s acceptance was received)
June 15	Bank A/c	Dr.		9,900
	Discount Charges A/c	Dr.		100
	To Bills Receivable A/c (Bill no 1)				10,000
	(Bill no 1 which was issued for two months discounted at 6% p.a. for two months)
June 15	Z	Dr.		5,000
	To Bills Receivable A/c (Bill no 2)				5,000
	(Y’s acceptance Bill no 2 endorsed in favour of Z)
Sep.18	Y	Dr.		5,050
	To Z				5,050
	(Y’s acceptance which had endorsed in favour Z dishonoured)
Oct.01	Y	Dr.		50
	To Interest A/c				50
	(Interest due from Y)
	Cash A/c	Dr.		5,100
	To Y				5,100
	(Amount due from Y received)

 

Books of Y
Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2019
June 15	Purchases A/c	Dr.		15,000
	To X				15,000
	(Goods were bought from X)
June 15	X	Dr.		15,000
	To Bills Payable A/c (Bill no 1)				10,000
	To Bills Payable A/c (Bill no 2)				5,000
	(Bills drawn by X were accepted)
Aug.18	Bills Payable A/c (Bill no 1)	Dr.		10,000
	To Bank A/c				10,000
	(Payment made for bill on maturity)
Sep.18	Bills Payable A/c (Bill no 2)	Dr.		5,000
	Noting Charges A/c	Dr.		50
	To X				5,050
	(Bill dishonoured)
Oct.01	Interest A/c	Dr.		50
	To X				50
	(Interest due to X)
Oct.01	X	Dr.		5,100
	To Cash A/c				5,100
	(Payment made to X)

Page No 16.38:

Question 28:

X draws a bill on Y for  ` 2,000 on 1st January, 2019, Y accepts the same and returns it to X. The bill was drawn by X in full settlement of a debt owing by Y amounted to  ` 2,050. X discounts the bill on the same date with the Central Bank of India for  ` 1,980. On maturity the bill was duly met by Y.
Give the entries in the books of X and Y.
Suppose the bill is dishonoured, what entries will be passed?

Answer:

Books of X
Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2019
Jan.01	Bills Receivable A/c	Dr.		2,000
	Discount Allowed A/c	Dr.		50
	To Y				2,050
	(Y’s acceptance was received and discount allowed)
Jan.01	Bank A/c	Dr.		1,980
	Discount Charges A/c	Dr.		20
	To Bills Receivable A/c				2,000
	(Y’s acceptance was discounted with bank)

 

Books of Y.
Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2019
Jan.01	X	Dr.		2,050
	To Bills Payable A/c				2,000
	To Discount Received A/c				50
	(Bill drawn by X was accepted)
	Bills Payable A/c	Dr.		2,000
	To Bank A/c				2,000
	(Payment made for meeting the bill)

 

Journal entries – In case bill is dishonoured

 

Books of X.
Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2019
Jan.01	Bills Receivable A/c	Dr.		2,000
	Discount Allowed A/c	Dr.		50
	To Y				2,050
	(Y’s acceptance was received and discount allowed)
Jan.01	Bank A/c	Dr.		1,980
	Discount Charges A/c	Dr.		20
	To Bills Receivable A/c				2,000
	(Y’s acceptance was discounted with bank)
	Y	Dr.		2,050
	To Bank A/c				2,000
	To Discount Allowed A/c				50
	(Y’s acceptance became dishonoured)

 

Books of Y
Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2019
Jan.01	X	Dr.		2,050
	To Bills Payable A/c				2,000
	To Discount Received A/c				50
	(Bill drawn by X was accepted and discount received)
	Bills Payable A/c	Dr.		2,000
	Discount Received A/c	Dr.		50
	To X				2,050
	(Bill became dishonoured)

Page No 16.38:

Question 29:

On 1st June, 2019, A sold goods to B for  ` 250. B gave to A his acceptance payable 1 month after date. Before maturity B requests A to renew it, which A does adding  ` 10 to the new bill for interest.
Make the necessary Journal entries to record these transactions in the books of both A and B.

Answer:

Books of A Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2019
June 01	B	Dr.		250
	To Sales A/c				250
	(Goods were sold to B)
June 01	Bills Receivable A/c	Dr.		250
	To B				250
	(B’s acceptance was received)
July 04	B	Dr.		250
	To Bills Receivable A/c				250
	(B’s acceptance was cancelled)
July 04	B	Dr.		10
	To Interest A/c				10
	(Interest due from B on account cancelling the bill)
July 04	Bills Receivable A/c	Dr.		260
	To B				260
	(New bill including interest was accepted by B)

 

Books of B Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2019
June 01	Purchases A/c	Dr.		250
	To A				250
	(Goods were bought from A)
June 01	A	Dr.		250
	To Bills Payable A/c				250
	(Bills drawn by A was accepted)
July 04	Bills Payable A/c	Dr.		250
	To A				250
	(Bill got cancelled)
July 04	Interest A/c	Dr.		10
	To A				10
	(Interest due to for cancelling the bill)
July 04	A	Dr.		260
	To Bills Payable A/c				260
	(New bill including interest drawn by A was accepted)

 Page No 16.38:

Question 30:

A sold goods to B on 1st September, 2018 for  ` 16,000. B immediately accepted a 3 months bill. On the due date, B requested that the bill be renewed for a further period of 2 months. A agreed provided interest at 9% p.a. was paid immediately in cash. To this B was agreeable. The second bill was met on the due date. Give the Journal entries in the books of A.

Answer:

Books of A Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2018
Sep.01	B	Dr.		16,000
	To Sales A/c				16,000
	(Goods were sold to B)
Sep.01	Bills Receivable A/c	Dr.		16,000
	To B				16,000
	(B’s acceptance was received)
Dec.04	B	Dr.		16,000
	To Bills Receivable A/c				16,000
	(B’s acceptance was cancelled)
Dec.04	B	Dr.		240
	To Interest A/c				240
	(Interest due from at 9% for 2 months on the amount due)
	Working Note: Interest = 16,000 × 9% × 2/12 = Rs 240
Dec.04	Cash A/c	Dr.		240
	To Interest A/c				240
	(Amount for interest ware received from B)
Dec.04	Bills Receivable A/c	Dr.		16,000
	To B				16,000
	(B accepted a new bill)
2019
Feb.07	Cash A/c	Dr.		16,000
	To Bills Receivable A/c				16,000
	(Payment received on honouring of the bill)

 

Books of B
Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2018
Sep.01	Purchases A/c	Dr.		16,000
	To A				16,000
	(Goods were bought from A)
Sep.01	A	Dr.		16,000
	To Bills Payable A/c				16,000
	(Bills drawn by A was accepted)
Dec.04	Bill Payable A/c	Dr.		16,000
	To A				16,000
	(Bill got cancelled due to inability to pay)
Dec.04	Interest A/c	Dr.		240
	To A				240
	(Interest due to A at 9% p.a. for 2 months)
Dec.04	A	Dr.		240
	To Cash A/c				240
	(Payment for interest to A)
Dec.04	A	Dr.		16,000
	To Bills Payable A/c				16,000
	(New bill drawn by A was accepted)
2019
Feb.04	Bills Payable A/c	Dr.		16,000
	To Cash A/c				16,000
	(Payment of the bill made on due date)

 Page No 16.38:

Question 31:

On 1st May, 2019 Merchant & Co. sold goods to AB & Co. valued at  ` 500 and drew upon them a bill at 3 months for the amount. AB & Co. accepted the draft on presentation. When the bill was about to mature. AB & Co. expressed their inability to meet it, and offered to pay Merchant & Co.  ` 200 in cash and to accept a fresh bill for the balance plus interest at 6% p.a. for 3 months. Merchant & Co. agreed to the proposal and bill was renewed. On maturity, the bill was duly met.
Make the entries in the books of both the parties to record the above transactions.

Answer:

Books of Merchant & Co.
Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2019
May 01	AB & Co	Dr.		500
	To Sales A/c				500
	(Goods were sold to AB & Co)
May 01	Bills Receivable A/c	Dr.		500
	To AB & Co				500
	(AB & Co’s acceptance was received)
Aug.04	AB & Co	Dr.		500
	To Bills Receivable A/c				500
	(AB & Co’s acceptance was cancelled)
Aug.04	Cash A/c	Dr.		200
	To AB & Co				200
	(Cash received from AB & Co)
Aug.04	AB & Co			4.50
	To Interest A/c				4.50
	(Interest-due from AB & Co at 6% p.a. for 3 months)
	Working Note: 300 × 6% × 3/12 = Rs 4.50
Aug.04	Bills Receivable A/c	Dr.		304.50
	To AB & Co				304.50
	(AB & Co’s acceptance was received including the interest for 3 months)
				304.50
Nov.07	Cash A/c	Dr.			304.50
	To Bills Receivable A/c
	(Payment received on maturity the bill)

 

Books of AB & Co
Journal
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
2019
May 01	Purchases A/c	Dr.		500
	To Merchant & Co				500
	(Goods were bought from Merchant & Co)
May 01	Merchant & Co	Dr.		500
	To Bills Payable A/c				500
	(Bill drawn by Merchant & Co was accepted)
Aug.04	Bills Payable A/c	Dr.		500
	To Merchant & Co				500
	(Bill got cancelled)
Aug.04	Merchant & Co	Dr.		200
	To Cash A/c				200
	(Cash paid to Merchant & Co)
Aug.04	Interest A/c	Dr.		4.50
	To Merchant & Co				4.50
	(Interest due to Merchant & Co at 6% p.a. for 3 months on the amount due)
Aug.04	Merchant & Co	Dr.		304.50
	To Bill Payable A/c				304.50
	(New bill drawn by Merchant & Co was accepted)
Nov.07	Bills Payable A/c	Dr.		304.50
	To Cash A/c				304.50
	(Cash paid for honouring the bill)

Page No 16.39:

Question 32:

A owed B  ` 400. A accepted a Bill of Exchange at 3 months for this amount which B discounted for  ` 380.
Give the necessary Journal entries in the books of A and B if this bill is:
(a) dishonoured on the due date;
(b) met at maturity and
(c) retired under rebate at 6% p.a. 2 months before its maturity.

Answer:

Case (a) If the bill is dishonoured

Books of B
Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	Bills Receivable A/c	Dr.		400
	To A				400
	(A’s acceptance was received)
	Bank A/c	Dr.		380
	Discount Charges A/c	Dr.		20
	To Bills Receivable A/c				400
	(A’s acceptance was discounted with bank)
	A	Dr.		400
	To Bank A/c				400
	(A’s acceptance dishonoured)

 

Books of A
Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	B	Dr.		400
	To Bills Payable A/c				400
	(Bill drawn by A was accepted)
	Bills Payable A/c	Dr.		400
	To B				400
	(Bill drawn by B was dishonoured on maturity)

 

 Case (b) The bills met at maturity

Books of B
Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	Bills Receivable A/c	Dr.		400
	To A				400
	(A’s acceptance was received)
	Bank A/c	Dr		380
	Discount Charges A/c	Dr.		20
	To Bills Receivable A/c				400
	(A’s acceptance was discounted with bank)

 

Books of A
Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	B	Dr.		400
	To Bills Payable A/c				400
	(Bills drawn by A was accepted)
	Bill Payable A/c	Dr.		400
	To Cash A/c				400
	(Payment made meeting the bill on maturity)

 

Case (c) If bill is retired under rebate at 6% p.a. 2 months before its maturity

Books of B
Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	Bills Receivable A/c	Dr.		400
	To A				400
	(A’s acceptance was received)
	Cash A/c	Dr.		396
	Rebate A/c	Dr.		4
	To Bills Receivable A/c				400
	(Payment received 2 months before its maturity and gave rebate)

 

Working Note:

Rebate=400×6/100×2/12=Rs. 4

Books of A
Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	B	Dr.		400
	To Bills Payable A/c				400
	(Bill drawn by B was accepted)
	Bills Payable A/c	Dr.		400
	To Cash A/c				396
	To Rebate A/c				4
	(Bill discharge before 2 months of its due date and rebate was received)

 Page No 16.39:

Question 33:

Amar sells goods to Bhola for  ` 10,000 and draws upon him a bill for the amount payable 3 months after date. The bill is accepted by Bhola. Amar discounts the bill with his bankers at a discount of  ` 150 inclusive of all charges. Bhola fails to meet this bill on maturity. Amar pays off his banker and his expenses amounting to  ` 100. Bhola gives a fresh bill, 2 months' date to Amar for  ` 10,250, which he met at maturity.
Show the necessary Journal entries in Amar's books.

Answer:

Books of Amar
Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	Bhola	Dr.		10,000
	To Sales A/c				10,000
	(Goods were sold to Bhola)
	Bills Receivable A/c	Dr.		10,000
	To Bhola				10,000
	(Bhola’s acceptance was received)
	Bank A/c	Dr.		9,850
	Discount Charges A/c	Dr.		150
	To Bills Receivable A/c				10,000
	(Bhola’s acceptance discounted with bank)
	Bhola	Dr.		10,100
	To Bank A/c				10,100
	(Bhola’s acceptance declared dishonoured)
	Bank A/c	Dr.		10,100
	To Cash A/c				10,100
	(Payment made to bank with noting charges for dishonoring of the bill)
	Bhola	Dr.		150
	To Interest A/c				150
	(Interest due from Bhola for on account of bill dishonor)
	Bills Receivable A/c	Dr.		10,250
	To Bhola				10,250
	(New bill accepted by Bhola for the amount due including rating charges and interest)
	Cash A/c	Dr.		10,250
	To Bills Receivable A/c				10,250
	(Amount received)

 Page No 16.39:

Question 34:

Give the Journal entries for the following:
(a) B's acceptance to us for  ` 1,000 due this day, renewed at his request for 3 months with interest @ 6% p.a.
(b) Our bill to Chandra for  ` 5,000 renewed for 2 months with interest @ 6% p.a.
(c) B's acceptance of  ` 3,000 is discharged on his paying us cash  ` 1,000 and accepting a fresh bill for the balance with interest  ` 100.

Answer:

(a)

Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	B	Dr.		1,000
	To Bills Receivable A/c				1,000
	(B’s acceptance was cancelled)
	B	Dr.		15
	To Interest A/c				15
	(Interest due from B)
	Bills Receivable A/c	Dr.		1,015
	To B				1,015
	(New bill was accepted by B including interest)

 

Working Note:

Interest = 1,000×6/100×3/12= Rs. 15

(b)

Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	Bills Payable A/c	Dr.		5,000
	To C. Chandra				5,000
	(Bill Payable was cancelled)
	Interest A/c	Dr.		50
	To C. Chandra				50
	(Interest at 6% p.a. for 2 month due to C. Chandra)
	C. Chandra	Dr.		5,050
	To Bills Payable A/c				5,050
	(New bill drawn by C. Chandra was accepted)

 

Working Note:

Interest = 5,000×6/100×2/12= Rs. 50

 

(c)

Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	B	Dr.		3,000
	To Bills Receivable A/c				3,000
	(Being B got cancelled his acceptance)
	Cash A/c	Dr.		1,000
	To B				1,000
	(Being Cash received from B)
	B	Dr.		100
	To Interest A/c				100
	(Being Interest due from B)
	Bills Receivable A/c	Dr.		2,100
	To B				2,100
	(Being New bill accepted by B for balance amount including interest)

 Page No 16.39:

Question 35:

Leena sold goods to Meena on 1st March, 2009 for  ` 68,000 and drew two Bills of Exchange of the equal amount upon Meena payable after three months. Leena immediately discounted the first bill with her bank at 12% p.a. The bill was dishonoured by Meena and Bank paid  ` 55 as noting charges.
The second bill was retired on 4th May, 2009 under a rebate of 6% p.a. with mutual agreement.
Journalise the above in the books of Leena and Meena.

Answer:

Books of Leena
Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2009
Mar.01	Meena	Dr.		68,000
	To Sales A/c				68,000
	(Being Goods were sold to Meena)
Mar.01	Bills Receivable A/c (Bill no. 1)	Dr.		34,000
	Bills Receivable A/c (Bill no. 2)	Dr.		34,000
	To Meena				68,000
	(Being Meena’s acceptance were received)
Mar.01	Bank A/c	Dr.		32,980
	Discount Charges A/c	Dr.		1,020
	To Bills Receivable A/c (Bill no. 01)				34,000
	(Being Bill no. 1 discount with bank at 12% p.a. for 3 months)
	Working Note: Interest = 34,000 × 12% × 3/12
May 04	Cash A/c	Dr.		33,830
	Rebate A/c	Dr.		170
	To Bills Receivable A/c (Bill no. 2)				34,000
	(Being Bill no. 2 retired before one month under a rebate at 6% p.a.)
	Working Note: Rebate = 34,000 × 6% × 1/12
June 04	Meena	Dr.		34,055
	To Bank A/c				34,055
	(Being Bill no. 1 which was discounted with bank proved dishonoured)

 

 

Books of Meena
Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2009
Mar.01	Purchases A/c	Dr.		68,000
	To Leena				68,000
	(Being Goods were bought from Leena)
Mar.01	Leena	Dr.		68,000
	To Bills Payable A/c (Bill no. 1)				34,000
	To Bills Payable A/c (Bill no. 2)				34,000
	(Being Bills drawn by Leena were accepted)
May 04	Bills Payable A/c (Bill no. 2)	Dr.		34,000
	To Cash A/c				33,830
	To Rebate A/c				170
	(Being Bill no. 2 discharge one month before due and received)
June 04	Bills Payable A/c (Bill no. 1)	Dr.		34,000
	Noting Charges A/c	Dr.		55
	To Leena				34,055
	(Being Bill no. 2 was dishonoured due to non payment)

Page No 16.39:

Question 36:

How will you record the following transactions in the books Kapadia?
(a) A bill received from Dalpat for  ` 1,000 has to be renewed, Dalpat agrees to pay  ` 20 as interest.
(b) Swamy's bill for  ` 800 endorsed in favour of Ghosh dishonoured, Ghosh pays  ` 10 as noting charges. Swamy pays  ` 300 immediately and agrees to accept a new bill for 3 months for the balance together with interest at 6% p.a. Ghosh's Account is settled by cheque.

Answer:

(a)

Books of Kapadia
Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	Dalpat	Dr.		1,000
	To Bills Receivable A/c				1,000
	(Being Dalpat acceptance cancelled)
	Dalpat	Dr.		20
	To Interest A/c				20
	(Being Interest due from Dalpat)
	Cash A/c	Dr.		20
	To Dalpat				20
	(Being Cash received from Dalpat for interest on renewal of the bill)
	Bills Receivable A/c	Dr.		1,000
	To Dalpat				1,000
	(Being New bill accepted by Dalpat)

(b)

Books of Kapadia
Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
	Swamy	Dr.		810
	To Ghosh				810
	(Being Swamy’s acceptance dishonoured and Ghosh paid Rs 10 as Noting Charges)
	Cash A/c	Dr.		300
	To Swamy				300
	(Being Cash received from Swamy)
	Swamy	Dr.		7.65
	To Interest A/c				7.65
	(Being Interest due from Swamy)
	Working Note: Interest = 510 × 6% × 3/12 = Rs 7.65
	Bills Receivable A/c	Dr.		517.65
	To Swamy				517.65
	(Being Swamy’s acceptance received for the balance due including interest)
	Ghosh	Dr.		810
	To Bank A/c				810
	(Being Amount due to Ghosh was paid through cheque)

 Page No 16.39:

Question 37:

Y purchased goods for  ` 6,000 on 1st June, 2011 from X and on the same date accepted a bill payable after three months. 3 days later, X endorsed the bill to Z. On maturity, the bill was dishonoured for non-payment and Z had to pay  ` 50 as noting charges. Two days after the dishonour of bill, Y paid  ` 2,000 to X and requested him to draw a second bill for the balance plus  ` 90 for the amount of interest, payable after two months. X accepted the proposal and draws the bill on Y, which was accepted by Y and was duly met on maturity.
Pass Journal entries for the above transactions in the books of X.

Answer:

Books of X
Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2011
June 01	Y	Dr.		6,000
	To Sales A/c				6,000
	(Being Goods sold to Y)
June 01	Bills Receivable A/c (Bill no. 1)	Dr.		6,000
	To Y				6,000
	(Being Y’s acceptance received)
June 04	Z	Dr.		6,000
	To Bills Receivable A/c (Bill no. 1)				6,000
	(Being Bill endorsed in favour of Z)
Sept.04	Y	Dr.		6,050
	To Z				6,050
	(Being Endorsed bill get dishonoured and noting charges were paid)
Sept.06	Cash A/c	Dr.		2,000
	Bills Receivable A/c (Bill no. 2) (4,050 + 90)	Dr.		4,140
	To Y				6,050
	To Interest A/c				90
	(Being Cash of Rs 2,000 was received and for the remaining balance new Bill issued including interest of Rs 90)
Nov.09	Cash A/c	Dr.		4,140
	To Bills Receivable A/c (Bill no. 2)				4,140
	(Being Bill met on the due date)

 Page No 16.40:

Question 38:

On 1st January, 2008, A sold goods to B for  ` 1,00,000 received  ` 25,000 in cash and drew two bills, first  ` 45,000 and second for  ` 30,000 of two months each. Both bills were duly accepted by B. First bill was endorsed to C in settlement of his account of  ` 45,000 and second bill was discounted from the bank at the rate of 12% p.a. On the due date of these bills, both bills were dishonoured, C has paid  ` 100 and bank has paid  ` 80 as noting charges.
Pass Journal entries in the books of A, B and C.

Answer:

Books of A
Journal
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2008
Jan.01	B	Dr.		1,00,000
	To Sales A/c				1,00,000
	(Being Goods were sold to B)
Jan.01	Cash A/c	Dr.		25,000
	Bills Receivable A/c (Bill no. 1)	Dr.		45,000
	Bills Receivable A/c (Bill no. 2)	Dr.		30,000
	To B				1,00,000
	(Being Cash and acceptances were received from B)
Jan.01	C	Dr.		45,000
	To Bill Receivable A/c (Bill no. 1)				45,000
	(Being Bill endorsed in favour of C)
Jan.01	Bank A/c	Dr.		29,400
	Discount Charges A/c	Dr.		600
	To Bills Receivable (Bill no. 2)				30,000
	(Being Bill no. 2 discounted with bank at 12% p.a. for 2 months)
	Working Note: Discount Charges = 30,000 × 12% × 2/12
Mar.04	B	Dr.		45,100
	To C				45,100
	(Being B’s acceptance which had endorsed to C was dishonoured and C paid Rs 100 as noting charges)
Mar.04	B	Dr.		30,080
	To Bank A/c				30,080
	(Being B’s acceptance which had discounted with bank was dishonoured and bank paid Rs 80 as noting charges)

 

Journal In the Books of B
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
2008
Jan. 01	Purchases A/c	Dr.		1,00,000
	To A				1,00,000
	(Being Goods purchased from A)
Jan. 01	A	Dr.		1,00,000
	To Cash A/c				25,000
	To Bills Payable A/c (1)				45,000
	To Bills Payable A/c (2)				30,000
	(Being Cash and bills given to A)
March 04	Bills Payable A/c (1)	Dr.		45,000
	Bills Payable A/c (2)	Dr.		30,000
	Noting Charges A/c	Dr.		180
	To A				75,180
	(Being Bills dishonoured)

 

Journal In the Books of C
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
2008
Jan. 01	Bills Receivable A/c (1)	Dr.		45,000
	To A				45,000
	(Being Bill received from A)
March 04	A	Dr.		45,100
	To Bills Receivable A/c (1)				45,000
	To Cash A/c				100
	(Being Bill dishonoured on due date)

 Page No 16.40:

Question 39:

Amar sells goods to Bhola for  ` 10,000 plus CGST and SGST @ 9% each. He receives the GST amount in cash and draws upon Bhola a bill for the balance amount payable 3 months after date. The bill is accepted by Bhola. Amar discounts the bill with his bank at a discount of  ` 150 inclusive of all charges. Bhola fails to meet this bill on maturity. Amar pays off his bank and his expenses amounting to  ` 100. Bhola gives a fresh bill of 2 months' date to Amar for  ` 10,250, which he meets at maturity. Show necessary Journal entries in Amar's books. 

Answer:

Journal in the books of Amar (Drawer)
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
	Bhola’s A/c	Dr.		11,800
	To Sales A/c				10,000
	To Output CGST A/c				900
	To Output SGST A/c				900
	(Being Goods sold to Bhola)
	Cash A/c	Dr.		1,800
	Bills Receivable A/c	Dr.		10,000
	To Bhola’s A/c				11,800
	(Being Cash and bill received)
	Bank A/c	Dr.		9,850
	Discounting Charges A/c	Dr.		150
	To Bills Receivable A/c				10,000
	(Being Bill discounted)
	Bhola’s A/c	Dr.		10,100
	To Bank A/c				10,100
	(Being Bill dishonoured)
	Bhola’s A/c	Dr.		150
	To Interest A/c				150
	(Being Interest due)
	Bills Receivable A/c	Dr.		10,250
	To Bhola’s A/c				10,250
	(Being New bill received)
	Cash A/c	Dr.		10,250
	To Bills Receivable A/c				10,250
	(Being New bill met on maturity)

 

Journal in the books of Bhola (Drawee)
Date	Particulars		L.F.	Debit Amount ( `)	Credit Amount ( `)
	Purchases A/c	Dr.		10,000
	Input CGST A/c	Dr.		900
	Input SGST A/c	Dr.		900
	To Amar’s A/c				11,800
	(Being Goods purchased from Amar)
	Amar’s A/c	Dr.		11,800
	To Bills Payable A/c	Dr.			10,000
	To Cash A/c				1,800
	(Being Cash paid and bill accepted)
	Bills Payable A/c	Dr.		10,000
	Noting Charges A/c	Dr.		100
	To Cash A/c				10,100
	(Being Bill dishonoured)
	Interest A/c	Dr.		150
	To Amar’s A/c				150
	(Being Interest due)
	Amar’s A/c	Dr.		10,250
	To Bills Payable A/c				10,250
	(Being New bill accepted)
	Bills Payable A/c	Dr.		10,250
	To Cash A/c				10,250
	(Being New bill met on maturity)