Bills of Exchange: Dishonour and Renewal
On 1st January, 2014 Archana drew a bill for Rs. 6,000 for a 2-month period on Ramya. Ramya duly accepted the bill. On 4th January 2014, Archana discounted the bill with her bank for Rs. 5,850. However, on the due date, the bill was dishonoured. Ramya agreed to accept a new bill with an interest of Rs. 150 for a period of one month. The new bill was duly met on the due date.
Give the journal entries in the books of Archana and show Archana’s Account in the books of Ramya.
Journal Entries (In the Books of Archana)
| Date | Particulars | L.F. | Debit (Rs) | Credit (Rs) |
|---|---|---|---|---|
| Jan 01, 2014 |
Bills Receivable A/c Dr.
To Ramya's A/c
|
6,000 | 6,000 | |
| (Being bill drawn on Ramya and accepted) | ||||
| Jan 04, 2014 |
Bank A/c Dr.
Discount A/c Dr. To Bills Receivable A/c
|
5,850 150 |
6,000 | |
| (Being bill discounted with the bank) | ||||
| Mar 04, 2014 |
Ramya's A/c Dr.
To Bank A/c
|
6,000 | 6,000 | |
| (Being discounted bill dishonoured on the due date) | ||||
| Mar 04, 2014 |
Ramya's A/c Dr.
To Interest A/c
|
150 | 150 | |
| (Being interest due from Ramya for renewal) | ||||
| Mar 04, 2014 |
Bills Receivable A/c (New) Dr.
To Ramya's A/c
|
6,150 | 6,150 | |
| (Being new bill for Rs. 6,000 plus interest Rs. 150 accepted by Ramya) | ||||
| Apr 07, 2014 |
Bank A/c Dr.
To Bills Receivable A/c (New)
|
6,150 | 6,150 | |
| (Being new bill duly met by Ramya on the due date) | ||||
Ledger Account (In the Books of Ramya)
Archana's Account
| Dr. (Debit) | Cr. (Credit) | ||||||
|---|---|---|---|---|---|---|---|
| Date | Particulars | J.F. | Amount (Rs) | Date | Particulars | J.F. | Amount (Rs) |
| Jan 01, 2014 | To Bills Payable A/c | 6,000 | Jan 01, 2014 | By Balance b/d | 6,000 | ||
| Mar 04, 2014 | To Bills Payable A/c (New) | 6,150 | Mar 04, 2014 | By Bills Payable A/c | 6,000 | ||
| Mar 04, 2014 | By Interest A/c | 150 | |||||
| Total | 12,150 | Total | 12,150 | ||||