Page 124 - DEBK-XI(2020)

Accounting for Bills of Exchange 16.5

June 7 Bills Payable (3) A/c ...Dr. 55,000
To A 55,000
(Being the Bill Payable (3) dishonoured on due date)
June 7 A ...Dr. 55,000
To Deficiency A/c 55,000
(Being the amount of unpaid bill transferred)
JOURNAL OF THE BANK
Date Particulars L.F. Dr. (`) Cr. (`)
2017
Jan. 1 Bills Discounted A/c ...Dr. 30,000
To A 29,400
To Discounting Charges A/c 600
(Being the acceptance of B discounted)
March 4 A ...Dr. 30,080
To Bills Discounted A/c 30,000
To Cash A/c 80
(Being the bill dishonoured and noting charges paid)
2. On 12th February, 2017, X sold goods for ` 6,000 to Y. On 15th February, 2017,
X drew three bills of exchange worth ` 3,000, ` 2,000 and ` 1,000 payable after
3 months, 2 months and 1 month respectively. Y accepted all the bills and returned
them to X immediately. X discounted the first bill on 15th March, 2017 @ 10% p.a. with
his bank. He endorsed the second bill to Z on 20th February, 2017. He retained
the third bill till maturity.
Y met the third bill on due date but dishonoured the first and the second bills.
Noting charges amounting to ` 25 for each of these two bills were incurred.
Y was declared insolvent and could pay only 50 paise in a rupee on 30th May, 2017
in full settlement.
Pass Journal entries in the books of X and Y.
Solution: JOURNAL OF X
Date Particulars L.F. Dr. (`) Cr. (`)
2017
Feb. 12 Y ...Dr. 6,000
To Sales A/c 6,000
(Being the goods sold to Y on credit)
Feb. 15 Bills Receivable (I, II & III) A/c ...Dr. 6,000
To Y 6,000
(Being the bills for ` 3,000, ` 2,000 and ` 1,000 accepted by
Y payable after 3 months, 2 months and 1 month respectively)
Feb. 20 Z ...Dr. 2,000
To Bills Receivable (II) A/c 2,000
(Being the bills receivable endorsed)
March 15 Bank A/c ...Dr. 2,947
Discounting Charges A/c ...Dr. 53
To Bills Receivable (I) A/c 3,000
(Being the bill receivable discounted with the bank)