On 1st March, 2013. Ramchandra sold goods to Raman worth Rs. 8,000/- and Raman accepted the Bill for Rs. 8,000/- at 3 months drawn by Ramchandra. Ramchandra discounted the bill with his bank @ 6% p.a. On due date the bill was dishonoured and Raman requested Ramchandra to accept Rs. 4,000/- immediately and draw upon him a new bill for the remaining amount at 3 months together with an interest @ 10% p.a. Ramchandra agreed. The second Bill was duly honoured. Give Journal entries in the books of Ramchandra.

1.    On 1st March, 2013. Ramchandra sold goods to Raman worth Rs. 8,000/- and Raman accepted the Bill for Rs. 8,000/- at 3 months drawn by Ramchandra. Ramchandra discounted the bill with his bank @ 6% p.a. On due date the bill was dishonoured and Raman requested Ramchandra to accept Rs. 4,000/- immediately and draw upon him a new bill for the remaining amount at 3 months together with an interest @ 10% p.a. Ramchandra agreed. The second Bill was duly honoured. Give Journal entries in the books of Ramchandra.

Solution:
Journal entries in the Books of Ramchandra.

Date
Particulars
LF
Debit
(Rs)
Credit
(Rs)
1.3.13
Raman's A/c ... Dr.

8000


To Sales A/c


8000

[Being the goods are sold]



1.3.13
Bills Receivable A/c …Dr.

8000


To Raman's A/c


8000

[Being the Bill is drawn]



1.3.13
Bank A/c …Dr.

7880


Discount A/c … Dr.

120


To Bills Receivable A/c


8000

[Being the Bill is discounted with the bank @ 6% p.a. ]



4.6.13
Raman's A/c … Dr.

8000


To Bank's A/c


8000

[Being the discounted bill is dishonoured]



4.6.13
Raman's A/c … Dr.

100


To Interest A/c


100

[Being Interest is charged on balance amount]



4.6.13
Cash / Bank A/c … Dr.

4000


To Raman's A/c


4000

[Being the part payment is made]



4.6.13
Bills Receivable A/c …Dr.

4100


To Raman's A/c


4100

[Being the New bill is drawn along with balance and interest on balance amount]



7.9.13
Cash/Bank A/c …… Dr.

4100


To Bills Receivable A/c


4100

[Being the second bill is duly honoured]