Bill of Exchange Remaining Practical Problems.

Neha sold goods to Rohan's ₹42,000 on 6th Sept. 2019. Neha drew a bill of exchange at 3 months for the amount which was accepted by Rohan. Neha disounted the bill with her bankers at ₹ 41,000. On the due date of the bill, Rohan dishonoured the bill and bank paid ₹ 300 as Noting Charges

Show Journal Entries in the Books of Neha and Rohan.

In the books of Neha

Journal Entries

Date Particulars L.F Debit (₹) Credit (₹)
2019 Sept. 6 Rohan’s A/c Dr 42,000
To Sales A/c 42,000
(Being goods sold on credit)
2019 Sept. 6 Bills Receivable A/c Dr 42,000
To Rohan’s A/c 42,000
(Being bill drawn and acceptance received)
2019 Sept. 6 Bank A/c Dr 41,000
Discount A/c Dr 1,000
To Bills Receivable A/c 42,000
(Being Rohan’s acceptance discounted with bank)
Dec. 9 Rohan’s A/c Dr 42,300
To Bank A/c 42,300
(Being Rohan’s acceptance discounted with bank dishonoured and noting charges paid by the bank.)
Total 1,68,300 1,68,300

In the books of Rohan

Journal Entries

Date Particulars L.F Debit (₹) Credit (₹)
2019 Sept. 6 Purchase A/c Dr 42,000
To Neha’s A/c 42,000
(Being goods purchased on credit)
2019 Sept. 6 Neha’s A/c Dr 42,000
To Bills Payable A/c 42,000
(Being our acceptance given)
2019 Dec. 9 Bills Payable A/c Dr 42,000
Noting Charges A/c Dr 300
To Neha’s A/c 42,300
(Being our acceptance dishonoured and noting charges payable)
Total 1,26,300 1,26,300

Jyoti owes ₹ 31,000 to Swati for which Swati draws a bill on Jyoti for 2 months. The bill was duly accepted by Jyoti. Swati sends the bill to bank for collection. Jyoti honoured the bill on the due date and bank charges ₹ 475 as bank charges.

Give Journal Entries in the Books of Swati.

In the books of Swati

Journal Entries

Date Particulars L.F Debit (₹) Credit (₹)
1 Bills Receivable A/c Dr 31,000
To Jyoti’s A/c 31,000
(Being bill drawn and acceptance received)
2 Bills Sent to Bank for Collection A/c Dr. 31,000
To Bills Receivable A/c 31,000
(Being bill sent to bank for collection)
3 Bank A/c Dr 30,525
Bank Charges A/c Dr 475
To Bill Sent to Bank for Collection A/c 31,000
(Being bill honoured and bank charges paid)
Total 93,000 93,000

Pankaj purchased goods of ₹ 20,000 from Omprakash on credit on 15th April 2019. Omprakash draws After Sight bill for the amount due on Pankaj for 3 months which was accepted by Pankaj on 18th April, 2019. On 20th April, 2019 Omprakash endorsed the bill to his creditor Jagdish in full settlement of his amount ₹ 21,000. On the due date, the bill was dishonoured by Pankaj.

Give Journal Entires in the Books of Omprakash, Pankaj and Jagdish.

In the books of Omprakash

Journal Entries

Date Particulars L.F Debit (₹) Credit (₹)
2019 April 15 Pankaj’s A/c Dr 20,000
To Sales A/c 20,000
(Being goods sold on credit)
2019 April 18 Bills Receivable A/c Dr. 20,000
To Pankaj’s A/c 20,000
(Being bill drawn and acceptance received)
2019 April 20 Jagdish’s A/c Dr 21,000
To Bills Receivable A/c 20,000
To Discount A/c 1,000
(Being Pankaj’s acceptance endorsed)
July 21 Pankaj’s A/c Dr 20,000
Discount A/c Dr 1,000
To Jagdish’s A/c 21,000
(Being Pankaj’s acceptance endorsed to Jagdish dishonoured, and discount reversed)
Total 82,000 82,000

In the books of Pankaj

Journal Entries

Date Particulars L.F Debit (₹) Credit (₹)
2019 April 15 Purchase A/c Dr. 20,000
To Omprakash’s A/c 20,000
(Being goods purchased on credit)
2019 April 18 Omprakash’s A/c Dr 20,000
To Bills Payable A/c 20,000
(Being our acceptance is given)
2019 April 20 No Entry - -
July 21 Bills Payable A/c Dr 20,000
To Omprakash’s A/c 20,000
(Being our acceptance dishonoured on due date)
Total 60,000 60,000

In the books of Jagdish

Journal Entries

Date Particulars L.F Debit (₹) Credit (₹)
2019 April 20 Bills Receivable A/c Dr. 20,000
Discount A/c Dr 1,000
To Omprakash’s A/c 21,000
(Being Bills Receivable received from Omprakash and discount allowed)
July 21 Omprakash’s A/c Dr 21,000
To Bills Receivable A/c 20,000
To Discount A/c 1,000
(Being Bills receivable dishonoured and discount reversed)
Total 42,000 42,000

Siddhant sold goods to Sudhir of ₹ 43,800 on 18th March 2019. Siddhant draws a bill on Sudhir on the same day for ₹ 43,800 for 3 months which was duly accepted by Sudhir. Siddhant discounted the bill on the same day at 8% p.a. the bill was dishonoured on the due date and Sudhir requested Siddhant to accept ₹ 13,800 and interest in cash on remaining amount at 12% p.a. Siddhant agreed and for the balance, the amount accepted a new bill at 2 months. Before the due date of new bill, Sudhir retired the bill by paying ₹ 29,700.

Pass necessary Journal Entries in the Books of Siddhant.

In the books of Siddhant

Journal Entries

Date Particulars L.F Debit (₹) Credit (₹)
2019 Mar. 18 Sudhir’s A/c Dr 43,800
To Sales A/c 43,800
(Being goods sold on credit)
2019 Mar. 18 Bills Receivable A/c Dr. 43,800
To Sudhir’s A/c 43,800
(Being bill drawn and acceptance received)
2019 Mar. 18 Cash / Bank A/c Dr 42,924
Discount A/c Dr 876
To Bill Receivable A/c 43,800
(Being Sudhir’s acceptance discounted with bank)
June 21 Sudhir’s A/c Dr 43,800
To Cash / Bank A/c 43,800
(Being Sudhir’s acceptance dishonoured on due date)
June 21 Cash A/c Dr 14,400
To Sudhir’s A/c 13,800
To Interest A/c 600
(Being cash accepted with interest from Sudhir)
June 21 New Bills Receivable A/c Dr 30,000
To Sudhir’s A/c 30,000
(Being Sudhir’s acceptance received for new bill)
(Date not specified) Cash / Bank A/c Dr. 29,700
Rebate A/c Dr. 300
To New Bills Receivable A/c 30,000
(Being before due date, Sudhir’s retired the bill with rebate)
Total 2,49,600 2,49,600

Working Notes :

(1) March 18, Discount = 43,800 × (3/12) × (8/100) = ₹ 876

(2) June 21, Calculation of interest on balance amount:
Remaining Amount = ₹43,800 - ₹13,800 = ₹30,000
Interest = (PNR)/100 = ₹ 30,000 × (12/100) × (2/12) = ₹ 600

(3) Before due date bill was retired by Sudhir by paying ₹ 300 less (₹30,000 - ₹29,700), which is considered as rebate. Date of retirement is not specified.

Sangeeta accepted a bill for ₹ 18,000 drawn by Geeta at 3 months. Geeta discounted the bill for ₹ 17,400. Before the due date Sangeeta approached Geeta for renewal of the bill. Geeta agreed on the condition that Sangeeta should pay ₹ 6,000 immediately and for the balance, she should accept a new bill for 4 months along with interest ₹ 550. The arrangements were carried through. But on the due date of new bill Sangeeta became insolvent and 35 paise in a rupee could be recovered from her estate.

Give Journal Entries in the Books of Sangeeta and prepare Sangeeta’s account in the books of Geeta.

In the books of Sangeeta

Journal Entries

Date Particulars L.F Debit (₹) Credit (₹)
1 Geeta’s A/c Dr 18,000
To Bill Payable A/c 18,000
(Being our acceptance is given)
2 Bills Payable A/c Dr 18,000
To Geeta’s A/c 18,000
(Being bill cancelled on our request)
3 Geeta’s A/c Dr 6,000
To Bank A/c 6,000
(Being part payment made)
4 Interest A/c Dr 550
To Geeta’s A/c 550
(Being the interest due on balance amount to be paid)
5 Geeta’s A/c Dr 12,550
To New Bills Payable A/c 12,550
(Being the acceptance given for balance amount plus amount of interest)
6 New Bills Payable A/c Dr 12,550
To Geeta’s A/c 12,550
(Being new bill dishonoured due to insolvency)
7 Geeta’s A/c Dr 12,550
To Cash A/c 4,392.50
To Deficiency A/c 8,157.50
(Being 35% of the amount due paid and balance credited to deficiency A/c)
Total 80,200 80,200

In the books of Geeta

Sangeeta’s Account

Working Notes :

(1) It is advisable to write journal entries in the books of Geeta also to get entries in ‘Sangeeta’s Account’ properly. (The above T-account is based on those implied entries).

In the books of Geeta

Journal Entries (For reference to build Sangeeta's A/c)

Date Particulars L.F Debit (₹) Credit (₹)
1 Bills Receivable A/c Dr. 18,000
To Sangeeta’s A/c 18,000
2 Bank A/c Dr. 17,400
Discount A/c Dr 600
To Bills Receivable A/c 18,000
3 Sangeeta’s A/c Dr 18,000
To Bank A/c
(Cancellation of discounted bill, as Sangeeta approached for renewal)		 18,000
4 Bank A/c Dr 6,000
To Sangeeta’s A/c 6,000
5 Sangeeta’s A/c Dr 550
To Interest A/c 550
6 Bills Receivable A/c Dr. (New Bill) 12,550
To Sangeeta’s A/c 12,550
7 Sangeeta’s A/c Dr 12,550
To Bills Receivable A/c (New Bill) 12,550
8 Cash A/c Dr 4,392.50
Bad debts A/c Dr 8,157.50
To Sangeeta’s A/c 12,550
Total 98,200 98,200

Priyanka owed Meena ₹ 18,000, Priyanka accepted a bill drawn Meena for the amount at 4 months. Meena endorsed the same bill to Sagar. Before due date Priyanka approached Meena for renewal of bill. Meena agreed on condition that ₹ 6,000 be paid immediately together with interest on the remaining amount of 8 % p. a. for 3 months and Priyanka should accept a new bill for the balance amount. These arrangements were carried through. However, before the due date, Priyanka became insolvent and only 50 % of the amount could be recovered from her estate.

Give Journal Entries in the Books of Meena.

In the books of Meena

Journal Entries

Date Particulars L.F Debit (₹) Credit (₹)
1 Bills Receivable A/c Dr. 18,000
To Priyanka’s A/c 18,000
(Being bill drawn and acceptance is received)
2 Sagar’s A/c Dr 18,000
To Bills Receivable A/c 18,000
(Being bill endorsed in favour of Sagar)
3 Priyanka’s A/c Dr. 18,000
To Sagar’s A/c 18,000
(Being the bill cancelled at the request of Priyanka for renewal)
4 Cash A/c Dr 6,240
To Priyanka’s A/c 6,000
To Interest A/c 240
(Being part payment and interest received in cash)
5 Bills Receivable A/c Dr (New Bill) 12,000
To Priyanka’s A/c 12,000
(Being new bill for remaining amount drawn and acceptance is received)
6 Priyanka’s A/c Dr 12,000
To Bills Receivable A/c 12,000
(Being the new bill dishonoured due to insolvency)
7 Cash A/c Dr 6,000
Bad Debts A/c Dr 6,000
To Priyanka’s A/c 12,000
(Being 50% received from Priyanka's estate due to insolvency)
Total 90,240 90,240

Working Note :

Calculation of interest on remaining amount ₹12,000 (₹18,000 - ₹6,000) @ 8% p.a. for 3 months:
I = (PNR) / 100 = 12,000 × (8/100) × (3/12) = ₹ 240.

Seema purchased goods from Roma on credit on 1st August, 2019 for ₹ 37,000, Seema accepts bill for 2 months drawn by Roma for the same amount on the same day Roma discounts the bill with the bank for ₹ 36,200 on 3rd August 2019. On the due date the bill is dishonoured and Noting Charges of ₹ 160 is paid by the bank. Seema pays ₹ 19,000 and Noting Charges in cash immediately. A new bill is drawn by Roma for the balance including interest ₹ 650 for 2 months, which is accepted by Seema. The new bill is retired one month before the due date at a rebate of ₹ 300

Give Journal Entries in the Books of Seema and prepare Seema’s Account in the books of Roma.

In the books of Seema

Journal Entries

Date Particulars L.F Debit (₹) Credit (₹)
2019 Aug. 1 Purchase A/c Dr 37,000
To Roma’s A/c 37,000
(Being goods purchased on credit)
2019 Aug. 1 Roma’s A/c Dr 37,000
To Bills Payable A/c 37,000
(Being our acceptance is given)
Oct. 4 Bills Payable A/c Dr 37,000
To Roma’s A/c 37,000
(Being our acceptance dishonoured)
Oct. 4 Noting Charges A/c Dr 160
To Roma’s A/c 160
(Being noting charges due to Roma)
Oct. 4 Roma’s A/c Dr 19,160
To Cash A/c 19,160
(Being paid part payment and noting charges in cash)
Oct. 4 Interest A/c Dr 650
To Roma’s A/c 650
(Being interest amount due)
Oct. 4 Roma’s A/c Dr 18,650
To Bills Payable A/c (New Bill) 18,650
(Being remaining due amount with interest, our acceptance is given for new bill)
Nov. 7 Bills Payable A/c (New Bill) Dr 18,650
To Cash A/c 18,350
To Rebate A/c 300
(Being new bill retired one month before due date with rebate)
Total 1,68,270 1,68,270

In the books of Roma

Seema’s Account

Uday purchased goods from Shankar on credit for ₹ 35,000 at 10 % Trade discount. Uday paid ₹1,500 immediately and for the balance accepted a bill for 3 months. Before the due date, Uday approached Shankar with a request to renew the bill. Shankar agreed but with condition that Uday should accept a new bill for 3 months including interest at 12 % p.a.

Give Journal Entries in the Books of Shankar.

In the books of Shankar

Journal Entries

Date Particulars L.F Debit (₹) Credit (₹)
1 Uday’s A/c Dr 31,500
To Sales A/c 31,500
(Being goods sold on credit @ 10 % trade discount)
2 Cash A/c Dr. 1,500
To Uday’s A/c 1,500
(Being cash received from Uday)
3 Bills Receivable A/c Dr. 30,000
To Uday’s A/c 30,000
(Being bill drawn and acceptance received)
4 Uday’s A/c Dr. 30,000
To Bills Receivable A/c 30,000
(Being the bill cancelled at the request of Uday for renewal)
5 Uday’s A/c Dr. 900
To Interest A/c 900
(Being interest amount due for renewal)
6 New Bills Receivable A/c Dr 30,900
To Uday’s A/c 30,900
(Being new bill drawn with interest and acceptance received)
Total 1,24,800 1,24,800

Working Note:

1. Sale Price after Trade Discount = ₹35,000 - (10% of ₹35,000) = ₹35,000 - ₹3,500 = ₹31,500.

2. Amount of first bill = ₹31,500 - ₹1,500 (cash paid) = ₹30,000.

3. Interest for renewal = (PNR) / 100 = ₹30,000 × (3/12) × (12/100) = ₹ 900.

4. Amount of new bill = ₹30,000 (old bill) + ₹900 (interest) = ₹30,900.

Sagar drawn an after sight bill on 21st Nov. 2019 for ₹ 21,000 at 3 months on Prasad. The bill is discounted by Sagar at 8 % p. a. with his bank. On maturity, Prasad finds himself unable to make payment of the bill and requests Sagar to renew it. Sagar accepts the request and draws a new bill at one month for ₹ 21,750 including interest which was duly accepted by Prasad. Sagar deposits the bill into bank for the collection. Prasad honours the bill on the due date and Bank charges ₹ 250 as Bank Charges.

Pass necessary Journal Entries in the Books of Sagar and prepare Sagar’s account in the books of Prasad.

In the books of Sagar

Journal Entries

Date Particulars L.F Debit (₹) Credit (₹)
2019 Nov. 21 Bills receivable A/c Dr 21,000
To Prasad’s A/c 21,000
(Being bill drawn and acceptance received.)
2019 Nov. 21 Bank A/c Dr 20,580
Discount A/c Dr 420
To Bills Receivable A/c 21,000
(Being bill discounted with bank)
2020 Feb. 24 Prasad’s A/c Dr 21,000
To Bank A/c 21,000
(Being discounted bill dishonoured)
2020 Feb. 24 Prasad’s A/c Dr 750
To Interest A/c 750
(Being interest due from Prasad for renewal)
2020 Feb. 24 New Bills Receivable A/c Dr. 21,750
To Prasad’s A/c 21,750
(Being new bill drawn and acceptance received)
2020 Feb. 24 Bill Sent for Collection A/c Dr 21,750
To New Bills Receivable A/c 21,750
(Being new bill sent for collection to bank)
Mar. 27 Bank A/c Dr 21,500
Bank Charges A/c Dr 250
To Bill sent for collection A/c 21,750
(Being the amount of the bill collected by the bank and credited to our Account by deducting bank charges)
Total 1,29,000 1,29,000

In the books of Prasad

Sagar’s Account

Journalise the following transaction in the books of Abhishek:-
a) Siddhant informs Abhishek that Vineet’s acceptance for ₹ 23,000 endorsed to Siddhant has been dishonoured. Noting Charges amounted to ₹ 430.
b) Kajal renews her acceptance to Abhishek for ₹ 39,000 by paying 3,000 in cash and accepting a fresh bill for the balance along with interest at 11.5 % p.a. for 3 months.
c) Radhika retired her acceptance to Abhishek for ₹ 23,000 by paying ₹ 22,250 by cheque.
d) Abhishek sent a bill of Subodh for ₹ 9,000 to bank for collection. Bank informed that the bill has been dishonoured by Subodh.

In the books of Abhishek

Journal Entries

Date Particulars L.F Debit (₹) Credit (₹)
(a) Vineet’s A/c Dr 23,430
To Siddhant’s A/c 23,430
(Being Vineet’s acceptance endorsed to Siddhant dishonoured and noting charges included)
(b) (i) Kajal’s A/c Dr. 39,000
To Bills Receivable A/c 39,000
(Being cancellation of Kajal's old bill for renewal)
(b) (ii) Cash A/c Dr. 3,000
To Kajal’s A/c 3,000
(Being cash received from Kajal as part payment)
(b) (iii) Kajal’s A/c Dr 1,035
To Interest A/c 1,035
(Being interest amount due from Kajal for renewal)
(b) (iv) New Bills Receivable A/c Dr. 37,035
To Kajal’s A/c 37,035
(Being new bill drawn and acceptance is received)
(c) Bank A/c (Cheque) Dr 22,250
Rebate A/c Dr (or Discount Allowed A/c) 750
To Bills Receivable A/c 23,000
(Being Radhika retired her acceptance with rebate)
(d) (i) Bill Sent for Collection A/c Dr. 9,000
To Bills Receivable A/c 9,000
(Being Subodh’s acceptance sent to bank for collection - assumed previous entry)
(d) (ii) Subodh’s A/c Dr 9,000
To Bill Sent for collection A/c 9,000
(Being Subodh’s acceptance sent for collection dishonoured.)
Total 1,44,500 1,44,500

Working Note (for b):

Balance amount for Kajal's renewal = ₹39,000 - ₹3,000 = ₹36,000.

Interest = ₹36,000 × (11.5/100) × (3/12) = ₹ 1,035.

New bill amount = ₹36,000 + ₹1,035 = ₹37,035.

Journalise the following transactions in the books of Narendra:-
a) Narendra retires his acceptance to Upendra by paying ₹ 4,000 in cash and endorsing a bill accepted by Ramlal for ₹ 5,000. (Assume the total acceptance to Upendra was ₹9,000)
b) Vikram’s acceptance to Narendra ₹ 6,000 retired one month before the due date at rebate of 12% p.a.
c) Dilip renews his acceptance to Narendra for ₹ 12,000 by paying ₹ 4,000 in cash and accepting a fresh bill for the balance plus interest at 12% p.a. for 3 months.
d) Bank informed Narendra that, Kartik’s acceptance for ₹ 13,000 to Narendra, discounted with the bank was dishonoured and Noting Charges paid by bank ₹ 140.

In the books of Narendra

Journal Entries

Date Particulars L.F. Debit (₹) Credit (₹)
(a) Bills Payable A/c (to Upendra) Dr 9,000
To Cash A/c 4,000
To Bills Receivable A/c (Ramlal's bill) 5,000
(Being our acceptance to Upendra retired by cash and endorsement of Ramlal's bill)
(b) Cash A/c Dr 5,940
Rebate A/c (or Discount Allowed A/c) Dr 60
To Bills Receivable A/c (Vikram's bill) 6,000
(Being Vikram’s acceptance retired with rebate)
(c) (i) Dilip’s A/c Dr 12,000
To Bills Receivable A/c 12,000
(Being cancellation of Dilip's old bill for renewal)
(c) (ii) Cash A/c Dr 4,000
To Dilip’s A/c 4,000
(Being cash received from Dilip)
(c) (iii) Dilip’s A/c Dr 240
To Interest A/c 240
(Being interest due from Dilip)
(c) (iv) New Bills Receivable A/c Dr. 8,240
To Dilip’s A/c 8,240
(Being fresh bill accepted by Dilip for balance plus interest)
(d) Kartik’s A/c Dr. 13,140
To Bank A/c 13,140
(Being Kartik’s acceptance dishonoured and bank paid noting charges)
Total 52,620 52,620

Journalise the following transactions in the books of Bharti:-
a) Bank informed that Amit’s acceptance for ₹15,750 sent to bank for collection was honoured and bank charges debited were ₹ 150.
b) Nitin renewed his acceptance for ₹ 22,200 by paying ₹ 2,200 in cash along with interest on balance amount at 10% p.a. and accepted a fresh bill for the balance for 3 months.
c) Dhanshri who had accepted Bharti’s bill for ₹ 17,500 was declared insolvent and only 40% of the amount due could be recovered from his estate.
d) Discharged our acceptance to Savita for ₹ 9,450 by endorsing Pravin’s acceptance to us for ₹ 9,000.

In the books of Bharti

Journal Entries

Date Particulars L.F Debit (₹) Credit (₹)
(a) Bank A/c Dr 15,600
Bank Charges A/c Dr. 150
To Bill Sent for Collection A/c 15,750
(Being Amit's acceptance sent for collection honoured and bank charges debited)
(b) (i) Nitin’s A/c Dr 22,200
To Bills Receivable A/c 22,200
(Being cancellation of Nitin's old bill for renewal)
(b) (ii) Cash A/c Dr 2,700
To Nitin’s A/c 2,200
To Interest A/c 500
(Being cash and interest received from Nitin)
(b) (iii) New Bills Receivable A/c Dr. 20,000
To Nitin’s A/c 20,000
(Being fresh bill accepted by Nitin for balance amount)
(c) (i) Dhanshri’s A/c Dr. 17,500
To Bills Receivable A/c 17,500
(Being Dhanshri's acceptance dishonoured due to insolvency)
(c) (ii) Cash A/c Dr. 7,000
Bad Debts A/c Dr 10,500
To Dhanshri’s A/c 17,500
(Being 40% received from Dhanshri's estate and balance written off)
(d) Bills Payable A/c (to Savita) Dr. 9,450
To Bills Receivable A/c (Pravin's bill) 9,000
To Discount Received A/c 450
(Being our acceptance to Savita discharged by endorsing Pravin’s acceptance and discount received)
Total 1,05,600 1,05,600

Working Note (for b):

Balance amount for Nitin's renewal = ₹22,200 - ₹2,200 = ₹20,000.

Interest = ₹20,000 × (10/100) × (3/12) = ₹500.

Total cash received = ₹2,200 (part payment) + ₹500 (interest) = ₹2,700.

New bill amount = ₹20,000 (balance after cash payment).

Journalise the following transactions in the books of Sudha:-
a) Endorsed Sonali’s acceptance at 2 months for ₹ 6,000 in favour of Urmila and paid cash ₹ 3,500 in full settlement of her account ₹ 10,000.
b) Discounted 2 months acceptance of Surya for ₹ 7,800 with bank at 10% p.a.
c) Bank informed that Anuradha’s acceptance of ₹ 4,800 which was discounted was dishonoured and bank paid Noting Charges ₹ 125.
d) Pooja honoured her acceptance of ₹ 16,400 which was deposited into bank for collection.

In the books of Sudha

Journal Entries

Date Particulars L.F Debit (₹ ) Credit (₹ )
(a) Urmila’s A/c Dr. 10,000
To Cash A/c 3,500
To Bills Receivable A/c (Sonali's bill) 6,000
To Discount Received A/c 500
(Being Sonali’s acceptance endorsed and cash paid to Urmila in full settlement)
(b) Bank A/c Dr 7,670
Discount A/c Dr 130
To Bills Receivable A/c (Surya's bill) 7,800
(Being Surya’s acceptance discounted with bank)
(c) Anuradha’s A/c Dr. 4,925
To Bank A/c 4,925
(Being discounted bill of Anuradha dishonoured and noting charges paid by bank)
(d) Bank A/c Dr 16,400
To Bill Sent for Collection A/c 16,400
(Being amount of Pooja's acceptance sent for collection, now collected)
Total 39,125 39,125

Journalise the following transactions in the books of Mrunal:-
a) Bank informed that Aishwarya’s acceptance of ₹ 24,000 which was discounted had been dishonoured and bank paid Noting Charges ₹ 220. Bill was renewed at the request of Aishwarya for 2 months with interest of ₹ 480.
b) Received ₹ 4,630 from private estate of Ankur who was declared insolvent against bill accepted by him for ₹ 6,000.
c) Accepted a bill of ₹ 15,000 at 3 months drawn by Anushka for the amount due to her ₹ 20,000 and balance paid by cheque.
d) Dishonoured our acceptance to Vivek ₹ 27,000 and Noting Charges paid by Vivek ₹ 700

In the books of Mrunal

Journal Entries

Date Particulars L.F Debit (₹) Credit (₹)
(a) (i) Aishwarya’s A/c Dr. 24,220
To Bank A/c 24,220
(Being discounted bill of Aishwarya dishonoured and noting charges paid by bank)
(a) (ii) Aishwarya’s A/c Dr 480
To Interest A/c 480
(Being interest amount due from Aishwarya for renewal)
(a) (iii) Bills Receivable A/c (New Bill) Dr 24,700
To Aishwarya’s A/c 24,700
(Being new acceptance received from Aishwarya for balance receivable including interest)
(b) Cash A/c Dr 4,630
Bad Debts A/c Dr 1,370
To Ankur’s A/c (or Bills Receivable A/c - if bill was still held) 6,000
(Being cash received from Ankur's private estate and balance written off as bad debts)
(c) Anushka’s A/c Dr 20,000
To Bank A/c (Cheque) 5,000
To Bills Payable A/c 15,000
(Being amount due to Anushka settled by cheque and acceptance of bill)
(d) Bills Payable A/c Dr. 27,000
Noting Charges A/c Dr 700
To Vivek’s A/c 27,700
(Being our acceptance to Vivek dishonoured and noting charges paid by Vivek now due to him)
Total 1,03,100 1,03,100

Book-keeping and Accountancy 12th Standard HSC Maharashtra State Board. Latest Syllabus.

ACCOUNTS BOARD PAPERS

Difficult Words & Meanings

  • Bill of Exchange: A written order from one person (drawer) to another (drawee) to pay a specific sum of money at a certain date or on demand.
  • Discounted the bill: Selling a bill of exchange to a bank before its due date for less than its face value. The difference is the bank's fee.
  • Dishonoured the bill: When the person who accepted the bill (drawee) fails to pay it on the due date.
  • Noting Charges: Fees paid to a Notary Public for officially recording that a bill of exchange was not paid.
  • Journal Entries: Records of daily financial transactions in order of date.
  • Debit (Dr): An accounting entry on the left side of an account, usually increasing assets/expenses or decreasing liabilities/income.
  • Credit (Cr): An accounting entry on the right side of an account, usually increasing liabilities/income or decreasing assets/expenses.
  • L.F (Ledger Folio): Page number in the main accounting book (ledger) where the transaction details are posted.
  • Bills Receivable (A/c): Money owed to a business by customers, formalized by a bill. It's an asset.
  • Bills Payable (A/c): Money a business owes to suppliers, formalized by a bill it accepted. It's a liability.
  • Acceptance: Agreeing to pay a bill of exchange by signing it.
  • Drawn (a bill): Creating or writing a bill of exchange.
  • Due Date: The date when payment for a bill is due.
  • Bank for Collection: Sending a bill to the bank for the bank to collect payment from the drawee on your behalf.
  • Honoured the bill: When the drawee pays the bill on or before the due date.
  • After Sight Bill: A bill payable a certain period after it is shown to and accepted by the drawee.
  • Endorsed the bill: Transferring a bill (and the right to receive its payment) to another person by signing on its back.
  • Creditor: A person or company to whom money is owed.
  • Full Settlement: An agreement to accept a payment (often less than the full amount) as complete discharge of a debt.
  • p.a. (per annum): Yearly or per year, often used for interest rates.
  • Retired the bill: Paying a bill before its official due date, often in return for a small discount (rebate).
  • Rebate: A discount given, often for early payment.
  • Renewal of the bill: Replacing an old bill (that cannot be paid on time) with a new one for an extended period, often including interest.
  • Insolvent: Unable to pay debts.
  • Estate (in insolvency): The total property and assets of an insolvent person available to pay off creditors.
  • Trade Discount: A reduction in the list price of goods given by a seller to a trade buyer. It's not recorded in accounting books; entries are made at the net price.
  • Deficiency Account: An account showing the shortfall of assets compared to liabilities when someone is insolvent.