On 14th May, 2012 Rohit sold goods on credit to Devidas for Rs. 30,000 on the same date Rohit draws a bill on Devidas for Rs. 30,000 at 4 months. Devidas accepted it an returned to Rohit.

Accounting Problem: Bill of Exchange Renewal

On 14th May 2012, Rohit sold goods on credit to Devidas for Rs. 30,000. On the same date, Rohit draws a bill on Devidas for Rs. 30,000 at 4 months, which Devidas accepted it and returned to Rohit.

On 17th June 2012, Rohit discounted the bill with his bank at 10% p.a.

On the due date, Devidas finds himself unable to make the payment and requests Rohit to renew it. Rohit accepted the proposal on the condition that Devidas should pay Rs. 10,000 on account, plus interest of Rs. 500 in cash, and accept a new bill for the balance for 2 months. These arrangements were carried through.

Task:

Give Journal Entries in the Books of Rohit.

Solution: Journal Entries in the Books of Rohit

Date	Particulars	L.F.	Debit (Rs.)	Credit (Rs.)
14-05-2012	Devidas’s A/c Dr.     To Sales A/c		30,000	30,000
(Being goods sold on credit)
14-05-2012	Bills Receivable A/c Dr.     To Devidas’s A/c		30,000	30,000
(Being the bill drawn and accepted)
17-06-2012	Bank A/c Dr. Discount A/c Dr.     To Bills Receivable A/c		29,250 750	30,000
(Being the bill discounted with the bank)
17-09-2012	Devidas’s A/c Dr.     To Bank A/c		30,000	30,000
(Being the discounted bill dishonoured by Devidas on due date)
17-09-2012	Devidas’s A/c Dr.     To Interest A/c		500	500
(Being the interest charged for renewal)
17-09-2012	Cash A/c Dr.     To Devidas’s A/c		10,500	10,500
(Being part payment of Rs. 10,000 and interest of Rs. 500 received)
17-09-2012	Bills Receivable A/c (New) Dr.     To Devidas’s A/c		20,000	20,000
(Being new bill drawn for the balance amount)

Working Notes

1. Calculation of Discount:
   The discount is calculated on the amount of the bill for the unexpired period from the date of discounting to the due date.

   Due Date: 14th May + 4 Months + 3 Grace Days = 17th September.
   Date of Discounting: 17th June.
   Unexpired Period: 3 months (from 17th June to 17th Sept).
   Formula: Amount × Rate × Period
   30,000 × (10/100) × (3/12) = Rs. 750

2. Calculation of New Bill Amount:
   The new bill is for the remaining balance after part payment.

   Amount of Dishonoured Bill: Rs. 30,000
   Less: Part Payment Received (excluding interest): Rs. 10,000
   Balance for New Bill: 30,000 - 10,000 = Rs. 20,000

• Accounts - March 2025 - English Medium Download Answer Key
• Accounts - March 2025 - Marathi Medium Download Answer Key
• Accounts - March 2025 - Hindi Medium Download Answer Key
• Accounts - July 2025 - English Medium Download Answer Key
• Accounts - March 2024 English Medium Download Answer Key
• Accounts - March 2024 - Marathi Medium Download Answer Key
• Accounts - March 2024 - Hindi Medium Download Answer Key
• Accounts - July 2024 - English Medium Download Answer Key
• Accounts - July 2023 - English Medium Download Answer Key
• Accounts - March 2022 View
• Accounts - July 2022 Download Answer Key
• Accounts - March 2021 Download Answer Key
• Accounts - March 2020 View
• Accounts - March 2014 View
• Accounts - October 2014 View
• Accounts - March 2015 Download Answer Key
• Accounts - July 2015 View
• Accounts - March 2016 View
• Accounts - July 2016 View
• Accounts - July 2017 View
• Accounts - March 2017 View
• Accounts - March 2018 View
• Accounts - July 2018 View
• Accounts - March 2019 View