The Scenario
Ameet draws a bill for Rs. 7,500 on Tushar for four months. Ameet discounts the bill with the bank at 8% p.a. On the due date, Tushar requests Ameet to accept Rs. 4,700 (including Rs. 200 for interest) and to draw a new bill for the balance for three months. Ameet agrees to this proposal. Before the due date of the new bill, Tushar retires the bill for Rs. 2,960.
Required: Pass the journal entries in the books of Tushar and prepare Tushar’s account in the books of Ameet.
Journal Entries in the Books of Tushar
| Date | Particulars | L.F. | Debit (Rs.) | Credit (Rs.) |
|---|---|---|---|---|
| 1 |
Ameet's A/c To Bills Payable A/c [Being the bill drawn by Ameet accepted for 4 months] |
7,500 | 7,500 | |
| 2 |
Bills Payable A/c To Ameet's A/c [Being the acceptance cancelled on request for renewal] |
7,500 | 7,500 | |
| 3 |
Interest A/c To Ameet's A/c [Being the interest due to Ameet for renewal] |
200 | 200 | |
| 4 |
Ameet's A/c To Bank A/c [Being the part payment made in cash along with interest] |
4,700 | 4,700 | |
| 5 |
Ameet's A/c To Bills Payable A/c [Being a new bill for the balance accepted for 3 months] |
3,000 | 3,000 | |
| 6 |
Bills Payable A/c To Bank A/c To Rebate on Bill A/c (or Discount A/c) [Being the new bill retired before the due date and rebate received] |
3,000 | 2,960 40 |