Salman draws a bill on Amithab worth Rs. 90,000 for three months which was accepted by Amithab. On the same date Salman discounted the bill with his bank @ 10 % p.a. On the due date Amithab dishonoured his acceptance. Amithab paid Rs. 40,000/- to Salman and accepted a fresh bill for two months for the balance including interest of Rs. 4000. Amithab became insolvent before the maturity of the bill and 50 paise in a rupee was received at first and final dividend from his estate. Journal entries books of Amithab.

Journal Entries in the Books of Amithab.


Date
Particulars
LF
Debit (Rs.)
Credit (Rs.)
? 1
Salman's A/c ....Dr.

90000


To Bills Payable A/c


90,000

[Being the bill is accepted]



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

90000


To Salman's A/c


90000

[Being the bill is dishonoured]



3
Interest A/c ....Dr.

4000


To Salman's A/c


4000

[Being the interest is charged]



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

40000


To Bank A/c


40000

[Being the part payment is made]



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

54000


To Bills Payable A/c


54000

[Being the new bill is accepted together with interest]



6
Bills Payable A/c ....Dr.

54000


To Salman's A/c


54000

[Being the new bill is dishonoured]



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

54000


To Bank A/c


27000

To Deficiency A/c


27000

[Being the drawee become Insolvent and only 50% of the amount could be recovered from his estate. ]