Q4. Raja of Nagpur draws a bill on Pradhan of Bhandara for Rs. 6,000 at 3 months. Pradhan accepted and returned it to Raja. Raja then sent the bill to bank for collection.
On due date, Pradhan finds himself unable to make payment of the bill and requests Raja to renew it. Raja accepted a proposal on the condition that, Pradhan should pay Rs. 1,000 on account along with interest Rs. 250 in cash and should accept new bill for the balance at 2 months. These arrangements were carried through. Afterwards, one month before due date of new bill Pradhan retired his acceptance by paying Rs. 4,850.
Give Journal entries in the books of Raja of Nagpur. [10]
Answer:
Journal Entries in the books of Raja of Nagpur.
Date
|
Particulars
|
L.F.
|
Debit
Rs.
|
Credit
Rs.
|
(1)
|
Bills Receivable A/c ...... Dr.
|
6000
| ||
To Pradhan A/c
|
6000
| |||
[Being the bill is drawn]
| ||||
(2)
|
Bank for collection A/c ....... Dr.
|
6000
| ||
To Bills Receivable A/c
|
6000
| |||
[Being the bill is sent for bank for collection]
| ||||
(3)
|
Pradhan A/c ....... Dr.
|
6000
| ||
To Bank for collection A/c
|
6000
| |||
[Being the bill is dishonoured]
| ||||
(4)
|
Pradhan A/c ....... Dr.
|
250
| ||
To Interest A/c
|
250
| |||
[Being interest is charged on balance Amount]
| ||||
(5)
|
Cash A/c
|
1250
| ||
To Pradhan A/c
|
1250
| |||
[Being the part payment is made along with interest]
| ||||
(6)
|
Bills Receivable A/c
|
5000
| ||
To Pradhan A/c
|
5000
| |||
[Being the new bill is drawn]
| ||||
(7)
|
Cash / Bank A/c .... Dr.
|
4850
| ||
Rebate A/c ..... Dr.
|
150
| |||
To Bills Receivable A/c
|
5000
| |||
[Being the bill is retired]
|
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