Page 128 - DEBK-XI(2020)

Accounting for Bills of Exchange 16.9

April 5 Interest A/c ...Dr. 300
To Anil 300
(Being the interest payable for renewal of bill)
April 5 Anil ...Dr. 5,320
To Bills Payable A/c 5,320
(Being the acceptance of a bill against the dues of bill cancelled together
with noting charges and interest)
Bills Payable A/c ...Dr. 5,320
To Bank A/c 5,320
(Being the payment of Anil’s Bill No. ....)
5. Journalise the following transactions in the books of Ravi:
(i) Ravi’s acceptance to Dinesh for ` 10,000 renewed at 3 months on the condition
that ` 2,000 be paid in cash immediately and the remaining amount will carry
interest @ 10% p.a.
(ii) Ravi’s acceptance to Shyam for ` 5,000 is retired before the due date, rebate
received being ` 200.
(iii) Ravi gets Govinda’s acceptance for ` 12,000 at 2 months discounted at 12% p.a.
Later, the bill is dishonoured on the due date and the bank pays ` 50 as noting
charges.
Solution: JOURNAL OF RAVI
Date Particulars L.F. Dr. (`) Cr. (`)
(i) Bills Payable A/c ...Dr. 10,000
To Dinesh 10,000
(Being the bill cancelled for renewal)
Dinesh ...Dr. 2,000
To Bank A/c 2,000
(Being a part payment made)
Interest A/c (WN) ...Dr. 200
To Dinesh 200
(Being the interest payable to Dinesh for the extended period)
Dinesh ...Dr. 8,200
To Bills Payable A/c 8,200
(Being the acceptance of a new bill for the balance plus interest)
(ii) Bills Payable A/c ...Dr. 5,000
To Bank A/c 4,800
To Discount Received A/c 200
(Being the bill retired before maturity and discount received ` 200)
(iii) Bank A/c ...Dr. 11,760
Discounting Charges A/c ...Dr. 240
To Bills Receivable A/c 12,000
(Being the bill discounted for 2 months @ 12% p.a.)
Govinda ...Dr. 12,050
To Bank A/c 12,050
(Being the bill dishonoured and noting charges paid by bank ` 50)
Working Note: Interest = ` 8,000 × 10/100 × 3/12 = ` 200.
6. On 1st January, 2017, A sold goods of the value of ` 20,000 to B on credit and drew
a bill for 3 months for the same amount which B accepted on the same date. The
bill was discounted for ` 19,700. On the due date, B notified his inability to meet
the bill and requested A to take it up and pay the noting charges of ` 150, which