Mukund owes (be obligated) Prakash Rs. 4000 for which Prakash draws a bill for 2 months on 1st February, 1989. Mukund accepts it and returns it to Prakash. On 4th March, 1989, Mukund approaches Prakash and request him to accept Rs. 1000 in cash and draw a fresh bill for 3 months for the balance plus interest @ 10% p.a. Prakash accepts the request and draw a bill accordingly which is accepted by Mukund. On 1st June 1989 Mukund retired his acceptance under discount of Rs. 30/-. Pass journal entries in the books of Prakash and prepare Prakash account in the ledger of Mukund.

               

Journal Entries in the Books of Prakash

Date	Particulars	LF	Debit (Rs)	Credit (Rs)
1.2.89	Bills Receivable A/c  ....Dr		4000
	To Mukund's A/c			4000
	[Being the bill is drawn]
4.3.89	Mukund's A/c ....Dr		4000
	To Bills Receivable A/c			4000
	[Being the bill is dishonoured]
4.3.89	Mukund's A/c ....Dr		75
	To Interest A/c			75
	[Being the Interest is Charged]
4.3.89	Cash A/c ....Dr		1000
	To Mukund's A/c			1000
	[Being the part – payment is made]
4.3.89	Bills Receivable A/c ....Dr		3075
	To Mukund's A/c			3075
	[Being the bill is drawn along with Interest]
1.6.89	Bank A/c ....Dr		3045
	Rebate A/c ....Dr		30
	To Bills Receivable A/c			3075
	[Being the new bill is retired]

In the Books of Mukund

Prakash's A/c

Date	Particulars	J F	Amount	Date	Particulars	J F	Amount
1.2.89	To Bills Payable A/c		4000	1.2.89	By Balance b/d		4000
4.3.89	To Cash A/c		1000	4.3.89	By Bills Payable A/c		4000
4.3.89	To Bills Payable A/c		3075	4.3.89	By Interest A/c		75
			8075				8075

On 1st January, 1988 Vandana drew a bill for Rs. 6,000 for 2 months periods on Lata. Lata duly accepted the bill. On 4th January 1988 Vandana discounted the bill with her bank for Rs. 5850. However, on the due date the bill was dishonoured. Lata agreed to accept a new bill with an interest of Rs. 100 for a period of one month. The bill was duly met on the due date. Give the journal entries in the books of Vandana and show Vandana’s account in the books of Lata.

Journal Entries In the Books of Vandana

Date	Particulars	LF	Debit (Rs)	Credit (Rs)
1.1.88	Bills Receivable A/c ....Dr.		6000
	To Lata's A/c			6000
	[Being the bill is drawn]
4.1.88	Bank A/c ....Dr.		5850
	Discount A/c ....Dr.		150
	To Bills Receivable A/c			6000
	[Being the bill is discounted]
4.3.88	Lata's A/c ....Dr.		6000
	To Bank A/c			6000
	[Being the Discounted bill is dishonoured]
4.3.88	Lata's A/c ....Dr.		100
	To Interest A/c			100
	[Being the Interest is Charged]
4.3.88	Bills Receivable A/c ....Dr.		6100
	To Lata's A/c			6400
	[Being the new bill is drawn along with interest]
7.4.88	Bank A/c ....Dr.		6100
	To Bills Receivable A/c			6100
	[Being the new bill is duly honoured]

In the Books of Lata

Vandana's A/c

Date	Particulars	J F	Amount	Date	Particulars	J F	Amount
1.1.88	To Bills Payable A/c		6000	1.1.88	By Balance b/d		6000
4.3.88	To Bills Payable A/c		6100	4.3.88	By Bills Payable A/c		6000
				4.3.88	By Interest A/c
			12100				12100