Ajith accepted a bill for Rs. 10,000 drawn by Surya at three months. Surya got the bill discounted with his bank for Rs. 9,700. Before the due date, Ajith approached Surya for renewal of the Bill. Surya agreed on the condition that Rs. 7,000 is paid immediately together with an interest on remaining amount at 18% p.a. for four months and for the balance Ajith should accept a new bill. But afterwards Ajith become insolvent and only 25% of the amount could be recovered from her estate. Pass journal entries in the books of Surya.



Journal Entries in the books of Surya


Date
Particulars
LF
Debit (Rs)
Credit (Rs)
? 1
Bills Receivable A/c .......Dr.

10000


To Ajith's A/c


10,000

[Being the bill is drawn]



2
Bank A/c .......Dr.

9700


Discount A/c .......Dr.

300


To Bills Receivable A/c


10000

[Being the bill is discounted]



3
Ajith's A/c .......Dr.

10000


To Bank A/c


10000

[Being the discounted bill is dishonoured]



4
Ajith's A/c .......Dr.

180


To Interest A/c


180

[Being the Interest is charged]



5
Bank A/c .......Dr.

7180


To Ajith's A/c


7180

[Being the part payment is made along with interest]



6
Bills Receivable A/c .......Dr.

3000


To Ajith's a/c


3000

[Being the new bill is drawn]



7
Ajith's A/c .......Dr.

3000


To Bills Receivable A/c


3000

[Being the new bill is dishonoured]



8
Bank A/c .......Dr.

750


Bad debts A/c .......Dr.

2250


To Ajith's A/c


3000

[Being the drawee become insolvent and only 25% of the amount could be recovered from her estate]