Mukund owes (be obligated) Prakash Rs. 4000 for which Prakash draws a bill for 2 months on 1st February, 1989. Mukund accepts it and returns it to Prakash. On 4th March, 1989, Mukund approaches Prakash and request him to accept Rs. 1000 in cash and draw a fresh bill for 3 months for the balance plus interest @ 10% p.a. Prakash accepts the request and draw a bill accordingly which is accepted by Mukund. On 1st June 1989 Mukund retired his acceptance under discount of Rs. 30/-. Pass journal entries in the books of Prakash and prepare Prakash account in the ledger of Mukund.



               
Journal Entries in the Books of Prakash

Date
Particulars
LF
Debit
(Rs)
Credit
(Rs)
1.2.89
Bills Receivable A/c  ....Dr

4000


To Mukund's A/c


4000

[Being the bill is drawn]



4.3.89
Mukund's A/c ....Dr

4000


To Bills Receivable A/c


4000

[Being the bill is dishonoured]



4.3.89
Mukund's A/c ....Dr

75


To Interest A/c


75

[Being the Interest is Charged]



4.3.89
Cash A/c ....Dr

1000


To Mukund's A/c


1000

[Being the part – payment is made]



4.3.89
Bills Receivable A/c ....Dr

3075


To Mukund's A/c


3075

[Being the bill is drawn along with Interest]



1.6.89
Bank A/c ....Dr

3045


Rebate A/c ....Dr

30


To Bills Receivable A/c


3075

[Being the new bill is retired]





In the Books of Mukund
Prakash's A/c

Date
Particulars
J
F
Amount
Date
Particulars
J
F
Amount
1.2.89
To Bills Payable A/c

4000
1.2.89
By Balance b/d

4000
4.3.89
To Cash A/c

1000
4.3.89
By Bills Payable A/c

4000
4.3.89
To Bills Payable A/c

3075
4.3.89
By Interest A/c

75



8075



8075