Apate draws a bill on Mapate for Rs. 8000 at 3 months. Mapate accepted the same and sent to Apate. Apate sent the same bill to his bank for collection. On due date Mapate found himself unable to make payment of the bill, and requested Apate to renew it.
Apate agreed on the condition that Mapate should pay Rs. 2000 and interest Rs. 200 on the remaining balance in cash and accept a fresh bill for the balance for two months.
These agreements were carried through. On due date of new bill it was duly honoured.
Pass journal entries and Mapate’s account in the books of Apate.
Solution:
Journal Entries in the Books of Apate. [Drawer]
Date

Particulars

L.F.

Debit
(Rs.)

Credit
(Rs.)

1.

Bills Receivable A/c ....Dr.

8000
 
To Mapate A/c

8000
 
[Being the bill is drawn]
 
2.

Sent to Bank for Collection A/c .... Dr.

8000
 
To Bills Receivable A/c

8000
 
[Being the bill is sent to bank for collection]
 
3.

Mapate A/c .... Dr.

8000
 
To Sent to Bank for Collection A/c

8000
 
[Being the bill is dishonoured]
 
4.

Mapate A/c ..... Dr.

200
 
To Interest A/c

200
 
[Being the interest is charged on balance amount]
 
5.

Cash A/c ..... Dr.

2200
 
To Mapate A/c

2200
 
[Being the part payment is made along with interest]
 
6.

Bills Receivable A/c ..... Dr.

6000
 
To Mapate A/c

6000
 
[Being the new bill is drawn]
 
7.

Cash A/c .... Dr.

6000
 
To Bills Receivable A/c

6000
 
[Being the new bill is duly honoured]

In the books of Apate
Mapate’s Account
Date

Particulars

Amount

Date

Particulars

Amount

?

To balance b/d

8000

1.

By Bills Receivable A/c

8000

3.

To Bank for Collections A/c

8000

5.

By Cash A/c

2200

4.

To Interest A/c

200

6.

By Bills Receivable A/c

6000

16200

16200
