Karthik accepted a bill for Rs. 20,000/- drawn by Jones at three months. Jones got the bill discounted with his bank for Rs. 19,900. Before the due date Karthik approached Jones for renewal of the bill. Jones agreed on the condition that Rs. 10,000/- be paid immediately together with interest on the remaining amount at 6% p.a. For balance Karthik should accept a new bill for three months. These arrangements were carried through but afterwards, Karthik become Insolvent and only 80 % of the amount could be recovered from his estate. Give journal entries in the books of Karthik.

Journal Entries in the Books of Karthik
       

Date
Particulars
LF
Debit (Rs)
Credit (Rs)
1
Jones A/c ....Dr.

20000


To Bills Payable A/c


20000

[Being the bill is accepted]



2
Bills Payable A/c ....Dr.

20000


To Jones A/c


20000

[Being the bill is dishonoured]



3
Interest A/c ....Dr.

150


To Jones's A/c


150

[Being the interest is charged]



4
Jones A/c ....Dr.

10150


To Bank A/c


10150

[Being the part payment is made along with interest]



5
Jones A/c ....Dr.

10000


To Bills Payable A/c


10000

[Being the new bill is accepted]



6
Bills payable A/c ....Dr.

10000


To Jones's A/c


10000

[Being the new bill is dishonoured]



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

10000


To Bank A/c


8000

To Deficiency A/c


2000

[being the drawee become insolvent and only 80% of the amount could be recovered from her estate]