Page 129 - DEBK-XI(2020)

16.10 Double Entry Book Keeping—CBSE XI

A did. The following day B met his obligation with a bill at 2 months for the amount
together with interest at 6% p.a. and paid cash for noting charges. When the bill
became due, B paid ` 10,000 and accepted a fresh bill at 3 months for ` 10,500.
B became insolvent before this last bill became due and a first and final dividend
of 25 paise in the rupee was realised from his estate on 1st December, 2017.
Pass Journal entries in the books of A to record the above transactions.
Solution: JOURNAL OF A
Date Particulars L.F. Dr. (`) Cr. (`)
2017
Jan. 1 B ...Dr. 20,000
To Sales A/c 20,000
(Being the goods sold to B on credit)
Jan. 1 Bills Receivable A/c ...Dr. 20,000
To B 20,000
(Being the acceptance received of the bill drawn on B for 3 months)
Bank A/c ...Dr. 19,700
Discounting Charges A/c ...Dr. 300
To Bills Receivable A/c 20,000
(Being the bill discounted for ` 19,700)
April 4 B ...Dr. 20,150
To Bank A/c 20,150
(Being the bill dishonoured at maturity—noting charges
` 150 paid by bank)
April 5 Cash A/c ...Dr. 150
To B 150
(Being the noting charges received in cash)
April 5 B ...Dr. 200
To Interest A/c 200
(Being the interest charged for 2 months @ 6% p.a. on ` 20,000)
April 5 Bills Receivable A/c ...Dr. 20,200
To B 20,200
(Being a fresh bill drawn on B for 2 months)
June 8 B ...Dr. 20,200
To Bills Receivable A/c 20,200
(Being the bill dishonoured at maturity)
June 8 Cash A/c ...Dr. 10,000
To B 10,000
(Being the part payment received)
June 8 B ...Dr. 300
To Interest A/c 300
(Being the interest charged for the period extended)
June 8 Bills Receivable A/c ...Dr. 10,500
To B 10,500
(Being a further bill drawn on B for 3 months)
Sept. 11 B ...Dr. 10,500
To Bills Receivable A/c 10,500
(Being the 3rd bill also dishonoured)
Dec. 1 Bank A/c ...Dr. 2,625
Bad Debts A/c ...Dr. 7,875
To B 10,500
(Being a first and final dividend received from the estate of
B @ 25 paise in a rupee)