Rose purchased goods from Lilly on credit for Rs. 2,000. On next day Rose paid Rs. 1,000 to Lilly and accepted a bill drawn by Lilly for the balance amount for four months. Lilly discounted the bill with her bank for Rs. 960/-. Before the due date Rose approached Lilly with a request to renew the Bill. Lilly agreed with the condition that Rose should pay Rs. 600 along with interest of Rs. 12 and accept a new bill for the balance. These arrangements were duly carried out. New bill is met on the due date. Pass journal entries books of Lilly.



Journal Entries in the books of Lilly.

Date
Particulars
LF
Debit (RS)
Credit (Rs)
? 1
Rose's A/c

2000


To Sales A/c


2000

[Being the goods are sold]



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

1000


To Rose's A/c


1000

[Being the part payment is made]



3
Bills Receivable A/c ..... Dr.

1000


To Rose's A/c


1000

[Being the bill is drawn by balance amount]



4
Bank A/c ..... Dr.

960


Discount A/c ..... Dr.

40


To Bills receivable A/c


1000

[Being the bill is discounted]



5
Rose's A/c ..... Dr.

1000


to Bank A/c


1000

[Being the discounted bill is dishonoured]



6
Rose's A/c ..... Dr.

12


To Interest A/c


12

[Being the interest is charged]



7
Bank A/c …..... Dr.

612


To Rose's A/c


612

[Being the part payment is made along with Interest]



8
Bills Receivable A/c ..... Dr.

400


To Rose's A/c


400

[Being the new bill is drawn]



9
Bank A/c ..... Dr.

400


To Bills Receivable A/c


400

[Being the new bill is duly honoured]