Minal draws a bill on Usha for Rs. 5,000 at 3 months. Usha accepts the bill and return to Minal. Minal discounted the bill @ 12 % p.a. with the bank. On Maturity Usha finds herself unable to make payment of the bill and requested Minal to renew the bill. Minal accepts the proposal on the condition that Usha should Pay Rs. 2,000 in cash and accept a new bill at one month along with interest at 10% p.a. These arrangements were carried through. Usha retires the bill by paying Rs. 3015/- Pass Journal Entries in the books of Minal.


Solution:
Journal Entries in the booms of Minal.

Date
Particulars
LF
Debit
(Rs)
Credit
(Rs)
1.
Bills Receivable A/c …Dr.

5000


To Usha's A/c


5000

[Being the Bill is drawn]



2.
Bank A/c …Dr.

4850


Discount A/c … Dr.

150


To Bills Receivable A/c


5000

[Being the Bill is discounted with the bank]



3.
Usha's A/c … Dr.

5000


To Bank's A/c


5000

[Being the discounted bill is dishonoured]



4.
Usha's A/c … Dr.

25


To Interest A/c


25

[Being Interest is charged on balance amount]



5.
Cash A/c ……… Dr.

2000


To Usha's A/c


2000

[Being the part payment is made]



6.
Bills Receivable A/c …Dr.

3025


To Usha's A/c


3025

[Being the New bill is drawn for balance amount along with interest and noting charges]



7.
Cash / Bank A/c … Dr.

3015


Rebate's A/c … Dr.

10


To Bills Receivable A/c


3025

[Being the second bill is retired]



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