Chanda accepted a bill for Rs. 6,000 drawn by Nanda at three months. Nanda got the bill discounted with his bank for Rs. 5,700. Before the due date, Chanda approached Nanda for renewal of the Bill. Nanda agreed on the condition that Rs. 3,000 is paid immediately together with an interest on remaining amount at 18% p.a. for four months and for the balance Chanda should accept a new bill. But afterwards Chanda become insolvent and only 25% of the amount could be recovered from her estate. Pass journal entries in the books of Chanda.



Journal Entries In the Books of Chanda.

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

6000


To Bills Payable A/c


6000

[Being the bill is accepted]



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

6000


To Nanda's A/c


6000

[Being the bill is dishonoured]



3
Interest A/c ....Dr.

180


To Nanda's A/c


180

[Being the Interest is charged]



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

3180


To Bank A/c


3180

[Being the part payment is charged along with interest]



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

3000


To Bills Payable A/c


3000

[Being the new bill is accepted]



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

3000


To Nanda's A/c


3000

[Being the new bill is dishonoured]



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

3000


To Bank A/c


750

To Deficiency A/c


2250

[Being the drawee become insolvent and only 40 % of the amount could be received from our estate]