1. Name any two types of commonly used negotiable ... 11TH... · 1. Name any two types of commonly used negotiable instruments. • S oluti n: Cheque and bill of exchange. 2. Write

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1. Name any two types of commonly used negotiable instruments.

• Solution: Cheque and bill of exchange.

2. Write two points of distinction between bills of exchange and promissory note.

• Solution:

Bill of Exchange Promissory Note

It is drawn by the creditor It is drawn by the debtor.

It contains an order to make payment to it. There can be three parties.viz,drawer,the

drawee and the payee

It contains a promise to make payment. There are only two parties to it, viz. the drawer and the payee.

3. State any four essential features of bill of exchange.

• Solution: o A bill of exchange must be in writing and not oral.

o It is an order to make payment.

o The order to make payment is unconditional.

o The maker of the bill of exchange must sign it.

4. State the three parties involved in a bill of exchange.

• Solution: Drawer, Drawee and Payee are the three parties involved in a bill of exchange.

5. What is meant by maturity of a bill of exchange?

• Solution: It is the date on which the instrument becomes due for payment.

6. What is meant by dishonour of a bill of exchange?

• Solution: A bill is said to have been dishonoured when the drawee fails to make the payment on the date of maturity.

7. Name the parties to a promissory note

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• Solution: There are two parties to a promissory note. Maker or Drawer and Drawee or Payee

8. What is meant by acceptance of a bill of exchange?

• Solution: The drawee accepts the bill prepared by the drawer. This is called acceptance of bill of exchange.

9. What is Noting of a bill of exchange.

• Solution: A bill of exchange should be duly presented for payment on the date of its maturity. The drawee is absolved of his liability if the bill is not duly presented. To prove that the bill was dishonoured, despite its due presentation, it may preferably to be got noted by Notary Public. Noting authenticates the fact of dishonour. For providing this service, a fee is charged by the Notary Public which is called Noting Charges.

10. What is meant by renewal of a bill of exchange?

• Solution: When the acceptor of the bill foresees that it may be difficult to meet the obligation of the bill on maturity due to temporary difficulties, he may approach the drawer with the request for extension for time for payment by canceling the old bill and drawing a fresh bill with new terms of payment. This is called renewal of the bill.

11. Give the performa of a Bills Receivable Book.

• Solution: No. of Bill

Date Received

Date of bill

From Whom Received Drawer Acceptor Where Payable

Term Due Date

Ledger Folio

Amount Cash Book Folio

Remarks

12. Give the performa of a Bills Payable Book.

• Solution: No. of Bill

Date of Bill

To whom given

Drawer Payee Where payable

Term Due date

Ledger Folio

Amount Paid

Date Cash Book Folio

Remarks

13. What is retirement of a bill of exchange?

• Solution: Sometimes the acceptor is prepared to (retire) pay the Bill before the date of maturity. In such a case the drawer may allow him a concession called Rebate or Discount at certain rate calculated on the unexpired period of maturity of the bill. This is called retirement of a bill of exchange.







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14. What is meant by insolvency?

• Solution: Insolvency means the inability to pay one's debts as they fall due.

15. Give the meaning of rebate.

• Solution: Sometimes the acceptor is prepared to (retire) pay the Bill before the date of maturity. In such a case the drawer may allow him a concession called Rebate or Discount at certain rate calculated on the unexpired period of maturity of the bill.

16. Give the performa of a Bill of Exchange.

• Solution: Mamta New Delhi

Rs.10,000 April 01,2006

Three months after date pay to me or my order, the sum of Rupees Ten Thousand only, for value received.

Stamp

Accepted

(signed) (Signed)

Jyoti Mamta

1.4.2006 196, Karol Bagh

73-B, Mahipalpur New Delhi

New Delhi 110 037

To

Jyoti

New Delhi 110 037 73-B, Mahipalpur

17. A bill of exchange must contain "an unconditional promise to pay" Do you

agree with a statement?

• Solution: According to the Negotiable Instruments Act 1881, a bill of exchange is defined as an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of a certain person or to the bearer of the instrument. The following are the features of a bill of exchange:







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o A bill of exchange must be in writing and not oral.

o It is an order to make payment.

o The order to make payment is unconditional.

o The maker of the bill of exchange must sign it.

o The payment to be made must be certain.

o The date on which payment is made must also be certain.

o The bill of exchange must be payable to a certain person.

o The amount mentioned in the bill of exchange is payable either on demand or on the expiry of a fixed period of time.

o It must be stamped as per the requirement of law.

18. Briefly explain the effects of dishonour and noting of a bill of exchange.

• Solution: A bill of exchange should be duly presented for payment on the date of its maturity. The drawee is absolved of his liability if the bill is not duly presented. Proper presentation of the bill means that it should be presented on the date of maturity to the acceptor during business working hours. To prove that the bill was dishonoured, despite its due presentation, it may preferably to be got noted by Notary Public. Noting authenticates the fact of dishonour. For providing this service, a fee is charged by the Notary Public which is called Noting Charges.The following points are generally noted by the Notary:

o Date, fact and reasons of dishonour;

o If the bill is not expressly dishonoured, the reasons why he treats it as dishonoured and;

o The amount of noting charges.

19. Explain briefly the procedure of calculating the date of maturity of a bill of

exchange? Give example.

• Solution: When the bill of exchange or a promissory note is not payable on demand, the payment is deferred to the date of maturity of the instrument. It is the date on which the instrument becomes due for payment. In arriving at the maturity date three days, known as days of grace, must be added to the date on which the period of credit expires instrument is payable.

Thus, if a bill dated March 05 is payable 30 days after date it, falls due on April 07, i.e. 33 days after March 05 if it were payable one month after date, the due date would be April 08, i.e. one month and 3 days after March 05. However, where the date of maturity is a public holiday, the instrument will become due on the preceding business day. In this case if April 08, falls on a public holiday then the April 07 will be the maturity date. But when an emergent holiday is declared under the Negotiable Instruments Act 1881, by the Government of India which may happen to be the date of maturity of a bill of exchange, then the date of







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maturity will be the next working day immediately after the holiday. For example, the Government declared a holiday on April 08 which happened to be the day on which a bill of exchange drawn by Gupta upon Verma for Rs.20,000 became due for payment, Since April 08, has been declared a holiday under the Negotiable Instruments Act, therefore, April 08, will be the date of maturity for this bill.

20. Distinguish between bill of exchange and promissory note.

• Solution: S.No Basis Bill of Exchange Promissory Note

1 Drawer It is drawn by the creditor It is drawn by the debtor.

2 Order/promise It contains an order to make payment to it. There can be three parties.viz,drawer,the drawee and the payee

It contains a promise to make payment. There are only two parties to it, viz. the drawer and the payee.

3 Acceptance It requires acceptance by the drawee or someone else on his behalf.

It does not require any acceptance.

4 Payee Drawer and payee can be the same party.

Drawer cannot be the payee of it.

5 Notice In case of its dishonor due notice of it is to be given by the holder to the drawer.

No notice needs to be given in case of its dishonor.

21. Briefly explain the purpose and benefits of retiring a bill of exchange to the debtor and the creditor.

• Solution: Sometimes the acceptor is prepared to (retire) pay the Bill before the date of maturity. In such a case the drawer may allow him a concession called Rebate or Discount at certain rate calculated on the unexpired period of maturity of the bill. This discount is a gain to the acceptor and a loss to the drawer.

The accounting treatment on the retirement of a bill is similar to the accounting treatment when a bill is honoured by the acceptor on the due date in the ordinary course. The only difference between the two relates to the granting of rebate.

The following journal entries are recorded:

In the books of the holder

On retiring the acceptance and rebate allowed

Cash A/c Dr.

Rebate on bills A/c Dr.

To Bills Receivables A/c

In the books of the drawee

Bills Payable A/c Dr.







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Cash A/c Dr.

To Rebate on Bills A/c

22. Explain briefly the purpose and advantages of maintaining of a Bills

Receivable Book.

• Solution: It is used to record the full details of bills received from customers and others. All the details of the bill-date, acceptor’s name, amount, term, place of payment, etc. are entered in the bills receivable book for presentation and further reference. The bills receivable book, like any other subsidiary book, is totaled periodically.

This total is debited to the "Bills Receivable Account" whereas the account of every individual debtor whom the bills received is credited in the ledger. The Bills Receivable Account is the account of an asset and would always have a debit balance. This balance on any date would represent the amount of bills receivable unmatured and on hand.

23. Briefly explain the benefits of maintaining a Bills Payable Book and state how

is its posting is done in the ledger?

• Solution: It is maintained like a bills receivable book. It is meant to record all the details, relating to the bills accepted by a person or a party, which are retained for being use in the future, in case of need.

Entries are made in the bills payable book whenever bills payable are accepted. Immediately, the personal account in the ledger is debited. At the end of the month, the total of bills payable book is posted creditor to whom to the credit of bills payable account in the ledger, thus completing the double entry for bills payable in the ledger.

24. On Jan 01, 2006 Rao sold goods Rs.10,000 to Reddy. Half of the payment was

made immediately and for the remaining half Rao drew a bill of exchange upon Reddy payable after 30 days. Reddy accepted the bill and returned it to Rao. On the due date Rao presented the bill to Reddy and received the payment. Journalise the above transactions in the books Rao and prepare of Rao’s account in the books of Reddy.

• Solution: Journal entries in the books of Rao

a) Bills Receivable a/c Dr. 10,000

To Reddy 10,000

(Being Reddy accepting the bill)

b) Bank a/c Dr. 10,000







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To Bills Receivable 10,000

(Being Reddy accepting to pay the bill on maturity)

Rao’s Account in the books of Reddy

Dr. Cr.

Date Particulars J.F Amount(Rs) Date Particulars J.F Amount(Rs)

Jan 2006 Bills Payable 10,000

25. Vishal sold goods for Rs.7,000 to Manju on Jan 05, 2006 and drewupon her a

bill of exchange payable after 2 months. Manju accepted Vishal’s draft and handed over the same to Vishal after acceptance. Vishal immediately discounted the bill with his bank@12% p.a. On the due date Manju met her acceptance. Journalise the above transactions in the books of Vishal and Manju.

• Solution: Journal entries in the books of Vishal

a) Bills receivable a/c Dr. 7,000

To Manju 7,000

(Being bill raised on Manju)


Discount a/c Dr. 140

To Bills receivable 7,000

(Being bill discounted)

c) Manju a/c Dr. 7,000

To Bank 7,000

(Being bill met by Manju on the due date)

Journal entries in the books of Manju

a) Vishal a/c Dr. 7,000

To Bills Payable 7,000

(Being bill raised by Vishal)

b) Bills Payable a/c Dr. 7,000

To Vishal 7,000







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(Being bill met by Manju on due date)

26. On Feb 01, 2006, John purchased goods for Rs.15,000 from Jimmi. He

immediately made a payment of Rs.5,000 by cheque and for the balance accepted the bill of exchange drawn upon him by Jimmi. The bill of exchange was payable after 40 days. Five days before the maturity of the bill, Jimmi sent the same to his bank for collection. The bank duly presented the bill to John on the due date who met the bill. The bank informed the same to Jimmi. Prepare John’s account in the books of Jimmi and Jimmi account in the books of John.

• Solution: Journal entries in the books of Jimmi

a) John a/c Dr. 15,000

To Sales 10,000

(Being goods sold to John)


To John 5,000

(Being Rs. 5,000 paid by cheque)

c) Bills receivable a/c Dr. 10,000

To John 10,000

(Being bill raised for the amount to which John owes)

d) Bank a/c Dr. 10,000


(Being bill met by Mr. John on due date)

Journal entries in the books of John

a) Purchases a/c Dr. 15,000

To Jimmi 15,000

(Being goods worth Rs. 15,000 purchased from Mr. Jimmi)

b) Jimmi a/c Dr. 5,000

To Bank 5,000

(Being received cheque from Mr. Jimmi)







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c) Jimmi a/c Dr. 10,000


(Being bill raised for the amount due from Mr. John)

d) Bills Payable a/c Dr. 10,000

To Jimmi 10,000

(Being bill settled by Mr. Jimmi)

27. On Jan 15, 2006, Kartar Sold goods for Rs.30,000 to Bhagwan anddrew upon

him three bills of exchanges of Rs.10,000 each payable after one month, two month, and three months respectively. The first bill was retained by Kartar till its maturity. The second bill was endorsed by him in favour of his creditor Ratna and the third bill was discounted by him immediately @ 6% p.a. All the bills were met by Bhagwan. Journalise the above transactions in the books of Kartar and Bhagwan. Also prepare ledger accounts in books of Kartar and Bhagwan.

• Solution: Journal entries in the books of Kartar

a) Bhagwan a/c Dr. 30,000

To Sales 30,000

(Being goods sold to Bhagwan)

b) Bills receivable a/c Dr. 30,000

To Bhagawan 30,000

(Being three bills accepted for Rs, 10,000 each payable in one, two and three months respectively)

c) Ratna a/c Dr. 10,000


(Being second bill endorsed to Mr. Ratna)




(Being third bill discounted @ 6%)







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e) Bank a/c Dr. 30,000


(Being all the bills met by Mr. Bhagwan)

Bhagwan Account

Dr. Cr.


Jan 2006

Sales 30,000 Jan 2006 Bills receivable 30,000

30,000 30,000

Journal entries in the books of Bhagwan


To Kartar 30,000

(Being goods purchased from Mr. Kartar on credit)

b) Kartar a/c Dr. 30,000


(Being three bills accepted each after one month, two months and three months respectively)

c) Bills Payable a/c Dr. 30,000

To Bank 30,000

(Being all the three bills paid)

Kartar Account

Dr. Cr.


Jan 2006 Bills Payable 30,000 Jan 2006 Purchases 30,000 30,000 30,000

28. On Jan. 01, 2006 Arun sold goods for Rs.30,000 to Sunil. 50% of thepayment

was made immediately by Sunil on which Arun allowed a cash discount of 2%. For the balance Sunil drew a promissory note in favour of Arun payable after 20 days. Since, the date of maturity of bill was a public holiday, Arun presented the bill on a day, as per the provisions of Negotiable Instrument Act which was met by Sunil. State the date on which the bill was presented by Arun for payment and Jounalise the above transactions in the books of Arun and Sunil.

• Solution: Journal entries in the books of Arun







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a) Sunil a/c Dr. 30,000

To Sales 30,000

(Being goods sold to Sunil)

b) Cash a/c Dr. 14,700


To Sunil 15,000

(Being 50% of the payment paid by cash after allowing 2% discount)


To Sunil 15,000

(being promissory note raised for the remaining amount)


To Sunil 15,000

(Being payment paid by Sunil)

The date of presenting the bill is the day after the public holiday.

Journal entries in the books of Sunil


To Arun 30,000

(Being goods purchased from Mr. Arun)

b) Arun a/c Dr. 15,000

To Cash 14,700

To Discount 300

(Being cash paid to Mr. Arun after accepting 2% discount)

c) Arun a/c Dr. 15,000

To Bills payable 15,000

(being bill raised by Mr. Arun)







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(Being bill paid in full settlement)

29. Darshan sold goods for Rs. 40,000 to Varun on 8.1.2006 and drew upon him a

bill of exchange payable after two months. Varun accepted the bill and returned the same to Darshan. On the due date the bill was met by Varun. Record the necessary Journal entries in the books of Darshan and Varun in the following circumstances.

• When the bill was retained by Darshan till the date of its maturity.

• When Darshan immediately discounted the bill @ 6% p.a. with his bank.

• When the bill was endorsed immediately by Darshan in favour of his creditor Suresh.

• When three days before its maturity, the bill was sent by Darshan to his bank for collection.

• Solution: Journal entries in the books of Darshan

When the bill was retained till the date of maturity

a) Varun a/c Dr. 40,000

To Sales 40,000

(Being goods sold to Varun)

b) Bills Receivable a/c Dr. 40,000

To Varun 40,000

(Being bill raised and accepted by Varun)

c) Bank a/c Dr. 40,000

Bills receivable 40,000

(Being bill met on the date of maturity)

When the bill was discounted with the bank


To Sales 40,000







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To Varun 40,000



Discount a/c Dr. 1,200


(Being bill discounted @ 6% for 2 months)


To Bills receivables 40,000

(Being bill met on due date)

When the bill is endorsed in favour of Suresh


To Sales 40,000



To Varun 40,000


c) Suresh a/c Dr. 40,000


(Being bill endorsed to mr. Suresh)

d) Varun a/c Dr. 40,000

To Suresh 40,000

(Being the bill amount paid to Mr. Suresh)

Journal entries in the books of Varun in all the three cases







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To Darshan

(being goods purchased from mr. Darshan)

b) Darshan a/c Dr. 40,000


(Being bill raised and accepted0


To bank 40,000

(Being bill paid on the due date)

30. Bansal Traders allow a trade discount of 10% on the list price of the goods

purchased from them. Mohan traders, who runs a retail shop made the following purchases from Bansal Traders.

Date Amount (Rs.)

Dec. 21, 2005

1,000

Dec. 26, 2005

1,200

Dec. 18, 2005

2,000

Dec. 31, 2005

5,000

For all the purchases Mohan Traders drew promissory note in favour of Bansal Traders payable after 30 days. The promissory note for the sale of Dec. 21, 2005 was retained by Bansal Traders with them till the date of its maturity. The promissory note drawn on 26.12.2005 was discounted by Bansal Traders from their bank at 12% p.a. The promissory note drawn on Dec. 28, 2005 was endorsed by Bansal Traders in favour of their creditor Dream Soaps in full settlement of a purchase amounting to Rs. 1,900. On 25.1.2006 Bansal Traders sent the promissory note drawn on Dec. 31, 2005 to their bank for collection. All the promissory notes were met by Mohan Traders. Record the necessary journal entries for the above transactions in the books of Bansal Traders and Mohan Traders and prepare Mohan Traders account in the books of Bansal Traders and Bansal Traders account in the books of Mohan Traders.

• Solution: Journal entries in the books of Bansal Traders







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Dec 21, 2005

a) Mohan a/c Dr. 1,000

To Sales 1,000

(Being goods sold to Mr. Mohan)


To Mohan 1,000

(Being bill raised)



(Being bill paid on due date)

Dec 26, 2005


To Sales 1,200



To Mohan 1,200

(Being bill raised)


Discount a/c Dr. 12


(Being bill discounted @ 12% for 1month)


To Bills receivables 1,200

(Being bill met on due date)

Dec 28, 2005







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To Sales 2,000



To Mohan 2,000

(Being bill raised)

c) Dream Soaps a/c Dr. 2,000


(Being bill endorsed to Dream soaps)




(being bill dishonoured and accepted)

Dec 31, 2005


To Sales 5,000



To Mohan 5,000

(Being bill raised)

c) Bill sent for collection a/c Dr. 5,000


(Being bill sent for collection)


To Bill sent for collection 5,000







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(Being bill sent for collection collected by the bank)

Journal entries in the books of Mohan


To Bansal Traders 9,200

(Being goods purchased on various dates recorded)

b) Bansal Traders a/c Dr. 9,200


(Bring bill payable for all the purchases)

c) Bills payable a/c Dr. 9,200

To Bansal Traders 9,200

(Being bills settled by Bansal Traders)

Mohan traders Account

Dr. Cr.


Dec 21 2005 Sales 1,000 Dec 21 2005 Bills receivable 1,000

Dec 26 2005 Sales 1,200 Dec 26 2005 Bills receivable 1,200

Dec 28, 2005 Sales 2,000 Dec 28, 2005 Bills receivable 2,000


9,200 9,200

Bansal traders Account

Dr. Cr.


Dec 31 2005 Bills payable 9,200 Dec 31, 2005 Purchases 9,200

9,200 9,200

31. Narayanan purchased goods for Rs.25,000 from Ravinderan on Feb.01, 2006. Ravinderan drew upon Narayanan a bill of exchange for the same amount payable after 30 days. On the due date Narayanan dishonoured his acceptance. Pass the necessary journal entries in the books of Ravinderan and Narayanan in following cases:

• When the bill was retained by Ravinderan with him till the date of its maturity.

• When the bill was discounted by Ravinderan immediately with his bank @ 6% p.a.







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• When the bill was endorsed to his creditor Ganeshan.

• When the bill was sent by Ravinderan to his bank for collection a few days before it maturity.

• Solution: Journal entries in the books of Raveenderen

When the bill is retained till the date of maturity

a) Narayanan a/c Dr. 25,000

To Sales 25,000

(Being goods sold to Narayanan) b) Bills receivable a/c Dr. 25,000

To Narayanan 25,000

(being bill received and accepted)

c) Narayanan a/c Dr. 25,000


(Bill dishonoured by Narayanan)

When the bill was discounted @6% p.a.


To Sales 25,000

(Goods sold to Narayanan)


To Narayanan 25,000

(Received Narayanan’s acceptance)




(Narayanan’s bill discounted @ 6% p.a.)

d) Narayanan a/c Dr. 25,000







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To Bank 25,000

(Discounted bill dishonoured by Narayanan)

When the bill was endorsed to his creditor, Ganeshan


To Sales 25,000



To Narayanan 25,000


c) Ganeshan a/c Dr. 25,000


(Bill endorsed to Mr. Ganeshan)

d) Narayanan a/c Dr. 25,000

To Ganeshan 25,000

(endorsed bill dishonoured by Narayanan)

When the bill is sent to the bank for collection


To Sales 25,000



To Narayanan 25,000




(Being bill sent for collection)







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(Being bill sent for collection collected by the bank)

Journal entries in the books of Narayanan


To Raveenderen 25,000

(Goods purchased from Raveenderen)

b) Raveenderen a/c Dr. 25,000


Bill accepted by Raveenderen)


To Raveenderen 25,000

(Accepted bill dishonoured)

32. Ravi sold goods for Rs.40,000 to Sudershan on Feb 13, 2006. He drew four

bills of exchange upon Sudershan. The first bill was for Rs.5,000 payable after one month. The second bill was for Rs.10,000 payable after 40 days; the third bill was for Rs.12,000 payable after three months and fourth bill was for the balance amount payable after 19 days. Sudershan accepted all the bills and returned the same to Ravi. Ravi discounted the first bill with his bank at 6% p.a. He endorsed the second bill to his creditor Mustaq for the full settlement of a debt of Rs.10,200. The third bill was kept by Ravi with him till the date of maturity. Five days before the maturity of the fourth bill, Ravi sent the bill to his bank for collection. All the four bills were dishounoured by Sudarshan on maturity. Sudershan settled Ravi’s claim in cash three days after the dishonour of each bill along with interest @ 12% p.a. for the terms of the bills. You are requested to record the necessary journal entries in the books to Ravi, Sudershan, Mustaq and bank for the above transaction. Also prepare Sudershan’s account and Mustaq’s account in the books of Ravi.

• Solution: Journal entries in the books of Ravi

a) Sudhershan a/c Dr. 40,000

To Sales 40,000

(Goods sold to Sudershan)

b) Bills receivable 1 a/c Dr. 5,000







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Bills receivable 2 a/c Dr. 10,000



To Sudershan 40,000

(Four bills raised)


Discount a/c Dr. 25

To Bills receivable 1 5,000

(bill discounted @ 6% p.a.)

d) Mushtaq a/c Dr. 10,200


To discount 200

(second bill endorsed to Mushtaq)

e) Sudershan a/c Dr. 40,000


(All the four bills were dishonoured)

f) Bill sent for collection a/c Dr. 7,000


(Fourth bill sent for collection)

g) Bank a/c Dr. 7,000

To Bills sent for collection 7,000

(Bill sent for collection collected by the bank)

h) Sudershan a/c Dr. 4,800

To Interest 4,800

(Interest charged for the delay in payment of bills)







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h) Bills receivable a/c Dr. 44,800

To Sudershan 44,800

(all the bills settled along with 12% interest)

Journal entries in the books of Sudershan


To Ravi 40,000

(goods purchased from Ravi)

b) Ravi a/c Dr. 40,000


(Bill raised and accepted)

Sudershan Account

Cr.

Particulars J.F Amount(Rs) Date Particulars J.F Amount(Rs)

Feb 13, 2006 Sales 40,000 Feb 13, 2006 Bills receivable 1

Bills receivable2

Bills receivable 3

Bills receivable 4

5,000

10,000

12,000

13,000

eb 2006 Bills receivable 40,000 Feb 2006 Bills receivable 44,800

Feb 2006 Interest 4,800

84,800 84,800

Mushtaq Account

Cr.


Feb 13, 2006 Bills receivable 2

Discount

10,000

200

Feb 13, 2006

33. On Jan 01, 2006 Neha sold goods for Rs.20,000 to Muskan and drew upon her

a bill of exchange payable after two months. One month before the maturity of the bill Muskan approached Neha to accept the payment against the bill at a rebate @ 12% p.a. Neha agreed to the request of Muskan and Muskan retired the bill under the agreed rate of rebate. Journalise the above transaction in the books of Neha and Muskan.







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• Solution: Journal entries in the books of Neha

Jan 01, 2006

a) Muskan a/c Dr. 20,000

To Sales 20,000

(Goods sold to Muskan)


To Muskan 20,000

(Bill raised for the goods sold)

c) Cash a/c Dr. 19,800

Rebate on bills a/c Dr. 200


(Bill retired one month before)

Journal entries in the books of Muskan

Jan 01, 2006


To Neha 20,000

(Goods purchased from neha)

b) Neha a/c Dr. 20,000


(Accepted Neha’s draft payable after 2 months)


To Cash 19,800

To Rebate on bills 200

(Acceptance in favour of Neha retired and rebate received @ 12%)







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34. On Jan 15, 2006 Raghu sold goods worth Rs. 35,000 to Devendra and drew upto the latter three bills of exchanges. The first bill was for Rs.5,000 payable after one month, the second bill was for Rs.20,000 payable after three months and third bill for balance amount for 4 months. Raghu endorsed the first bill in favour of his creditor Dewan in full settlement of a debt of Rs.5,200. The second bill was discounted by Raghu @ 6 % p.a. and the bill was retained by Raghu till the date of maturity. Devendra dishonoured the bill on maturity and the bank paid Rs. 30 as noting charges. Four days before the maturity of the third bill Raghu, sent the same for collection to his bank. The third bill was also dishonored by Devendra and the bank paid Rs.200 as noting charges. Five days after the dishonour of the bill Devendra paid the entire amount due to Raghu along with interest Rs.1,000 for this purpose Devendra obtained a short term loan from his bank. You are requested to record the necessary journal entries in the books of Raghu Devendra and Dewan and also prepare Devendra’s account in Raghu’s books and Raghu’s account in Devendra’s account.

• Solution: Journal entries in the books of Raghu

Jan 15, 2006

a) Devendra a/c Dr. 35,000

To Sales 35,000

(Goods sold to Devendra)

b) Bills receivable 1 (1 month) a/c Dr. 5,000

Bills receivable 2 (3 months) a/c Dr. 20,000

Bills receivable 3 (4 months) a/c Dr. 10,000

To Devendra 35,000

(Bills receivable received)

c) Dewan a/c Dr. 5,200


To Discount 200

(First bill endorsed to Dewan)




(Second bill discounted @ 6%)







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e) Devendra a/c Dr. 20,030

To Bank 20,030

(Second bill dishonoured and noting charges paid by bank)

f) Bill sent for collection a/c Dr. 10,000


(Third bill sent for collection)

g) Devendra a/c Dr. 10,200

To bank 10,200

(third bill dishonoured and noting charges paid by bank)

h) Bank a/c Dr. 20,030

To Devendra 20,030

(Second bill paid along with interest by Devendra)

i) Bank a/c Dr. 10,200

To Devendra 10,200

(Third bill paid after it wad dishonoured)

j) Interest a/c Dr. 1,000


(Interest amount paid for the delay in settling the bills)

Devendra Account

Cr.


Sales 35,000 Jan 2006 Bills receivable 1

Bills receivable 2

Bills receivable 3

5,000

20,000

10,000

April 15, 2006 Bills receivable 2

Cash

20,000

30

April 20, 2006 Bank 20,030

May 15, 2006 Bank 10,200 May 20, 2006 Bank 10,200

65,230 65,230







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Journal entries in the books of Devendra


To Raghu 35,000

(Goods purchased from Raghu)

b) Raghu a/c Dr. 35,000


(Accepted bills from Raghu)

c) Bills payable 2 a/c Dr. 20,000

Noting charges a/c Dr. 30

To Raghu 20,030

(Noting charges paid for dishonor of bill)

d) Bills payable 3 a/c Dr. 10,000


To Raghu 10,200

(Noting charges paid along with the amount due)

e) Interest a/c Dr. 1,000

To Raghu 1,000

(Interest allowed to Devendra)

f) Raghu a/c Dr. 35,000


(the entire amount paid to Raghu)

35. Viaml purchased goods Rs.25,000 from Kamal on Jan 15, 2006 and accepted a

bill of exchange drawn upon him by Kamal payable after two months. On the date of the maturity the bill was duly presented for payment. Vimal dishonoured the bill. record the necessary journal entries in the books of Kamal and Vimal when.

• The bill was retained by Kamal till the date of its maturity.







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• The bill was immediately discounted by Kamal with his bank @ 6% p.a.

• The bill was endorsed by Kamal in favour of his creditor Sharad.

• Five days before its maturity the bill was sent by Kamal to his bank for collection.

• Solution: Journal entries in the books of kamal

When the bill was retained by Kamal till the date of maturity

Jan 15, 2006

a) Vimal a/c Dr. 25,000

To Sales 25,000

(Goods sold to Vimal)


To Vimal 25,000

(Bill raised for the goods purchased)

c) Vimal a/c Dr. 25,000


(Bill dishonoured on due date)

When the bill was immediately discounted by Kamal with his bank @ 6%


To Sales 25,000



To Vimal 25,000










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(Bill discounted with the bank @ 6% p.a.)

Vimal a/c Dr. 25,000

To Bank 25,000

(Bill dihonoured by Vimal)

When the bill is endorsed in favour of Sharad


To Sales 25,000



To Vimal 25,000


c) Sharad a/c Dr. 25,000

To Bills receivable

(Bill endorsed to Sharad)

d) Vimal a/c Dr. 25,000

To Sharad 25,000

(Endorsed bill dishonoured by Vimal)

When the bill is sent for collection


To Sales 25,000



To Vimal 25,000








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(Bill sent for collection)

Journal entries in the books of Vimal


To Kamal 25,000

(goods purchased from Kamal)

b) Kamal a/c Dr. 25,000


(Accepted bill drawn by Kamal)


To Kamal 25,000

(Accepted bill dishonoured)

36. Abdula sold goods to Tahir on Jan 17, 2006 for Rs.18,000. He drew a bill of

exchange for the same amount on Tahir for 45 days. On the same date Tahir accepted the bill and returned it to Abdulla. On the due date Abdulla presented the bill to Tahir which was dishonoured. Abdulla paid Rs.40 as noting charges. Five days after the dishonour of his acceptance Tahir settled his debt by making a payment of Rs.18,700 including interest and noting charges. Record the necessary journal entries in the books of Abdulla and Tahir. Also prepare Tahir’s account in the books of Abdulla and Abdulla’s account in the books of Tahir.

• Solution: Journal entries in the books of Abdul

a) Tahir a/c Dr. 18,000

To Sales 18,000

(Goods sold to Tahir)


To Tahir 18,000








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c) Tahir a/c Dr. 18,040


To Cash 40

(Bill dishonoured on due date and noting charges paid)



(bill settled along with interest and noting charges)

Tahir Account

Dr. Cr.


Jan 17, 2006

Sales 18,000 Jan 17, 2006


Feb 28, 2006

Bills receivable

Cash

18,000

40

Journal entries in the books of Tahir


To Abdulla 18,000

(Goods purchased from Abdulla)

b) Abdulla a/c Dr. 18,000




Noting charges 40

To Abdulla 18,040

(accepted bill dishonoured)

d) Bills payable a/c Dr. 18,700

To bank 18,700

(Dishonoured bill paid along with interest and noting charges)

�







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Abdulla Account

Dr. Cr.


Jan 17, 2006

Bills Payable 18,000 Jan 17, 2006

Purchases 18,000

Feb 28, 2006

Bills Payable

Noting charges

18,000

40

37. Asha sold goods worth Rs.19,000 to Nisha on March 02, 2006. Rs.4,000 were paid by Nisha immediately and for the balance she accepted a bill of exchange drawn upon her by Asha payable after three months. Asha discounted the bill immediately with her bank. On the due date Nisha dishonoured the bill and the bank paid Rs.30 as noting charges. Record the necessary journal entries in the books of Asha and Nisha.

• Solution: Journal entries in the books of Asha

a) Nisha a/c Dr. 19,000

To Sales 19,000

(Goods sold to Nisha)


To Nisha 4,000

(Out of the sales, Rs.4,000 was paid immediately by Nisha)


To Nisha 15,000

(Bill raised for the remaining amount)

d) Nisha a/c Dr. 15,000

To Bank 15,000

(Discounted bill dishnoured by Nisha)

e) Nisha a/c Dr. 15,030


To bank 30

(Bill dishonoured and noting charges paid by bank)







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Journal entries in the books of Asha


To Nisha 19,000

(Goods sold to Nisha)

b) Nisha a/c Dr. 4,000

To Cash 4,000

(Immediate payment to the tune of Rs. 4,000)

c) Nisha a/c Dr. 15,000





To Nisha 15,030

(Bill dishonoured and noting charges paid by the bank)

38. On Feb. 02, 2006, Verma purchased from Sharma goods for Rs.17,500. Verma

paid Rs.2,500 immediately and for the balance gave a promissory note to Sharma payable after 60 days. Sharma immediately endorsed the promissory note in favour of his creditor. Gupta for the full settlement of a debt of Rs.15,400. On the due date of the bill Gupta presented the bill to Verma which the latter dishonoured and Gupta paid Rs.5,000 noting charges. On the same date Gupta informed Sharma about the dishonour of the bill. Sharma settled his debt to Gupta by cheque for Rs.15,500 which includes noting charges and interest. Verma settled Sharma’s claim by cheque for the same amount. Record the necessary journal entries is the books of Sharma, Gupta and Verma for the above transaction and prepare Verma’s and Gupta’s accounts in the books of Sharma. Sharma’s account in the books of Verma. And also Sharma’s account in the books of Gupta.

• Solution: Journal entries in the books of Sharma

a) Verma a/c Dr. 17,500

To Sales 17,500

(Goods sold to Verma)








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To Verma 2,500

(Immediate payment for the goods sold)


To Verma 15,000


d) Gupta a/c Dr. 15,000


(Bill endorsed to Gupta)

e) Verma a/c Dr. 20,000


To Gupta 5,000

(Verma dishonoured his acceptance on maturity and endorsee paying the noting charges)

f) Gupta a/c Dr. 15,500

To bank 15,500

(Sharma paying the balance he owes to Gupta by paying cheque)

g) Verma a/c Dr. 15,500


(Verma paying his dues towards the bill raised)

Journal entries in the books of Verma


To Sharma 17,500

(Goods purchased from Sharma)

b) Sharma a/c Dr. 2,500

To Cash 2,500

(Cash paid to settle initially)







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c) Sharma a/c Dr 15,000

To bills Payable 15,000



Noting charges a/c Dr. 5,000

To Sharma 20,000

39. Lilly sold goods to Methew on 1.3.2006 for Rs.12,000 and drew upon Methew

a bill of exchange for the same amount payable after two months. Lilly immediately discounted the bill with her bank at 9% p.a. The maturity date of the bill was a non business day (holiday), therefore, Lilly had to present the bill as per the provisions of the Indian Instruments Act.1881. The bill was dishonoured by Methew and Lilly paid Rs.45 as noting charges. Methew settled the claim of Lilly five days after the disonour of the bill by a cheque, whch includes interest @ 12% for the term of the bill. Journalise the above transactions in the books of Lilly and Methew and prepare Mathew’s account in the books of Lilly and Lilly’s account in the books of Mathew.

• Solution: Journal entries in the books of Lily

a) Mathew a/c Dr. 12,000

To Sales 12,000

(Goods sold to Mathew)


To Mathew 12,000





(Bill discounted @ 9% at the bank)

d) Mathew a/c Dr. 12,045

To Bank 12,000

To cash 45







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(Bill dis-honoured and noting charges paid by Lily)



(bill paid along with 12% interest)

Journal entries in the books of Mathew


To Lily 12,000

(Goods purchased from Lily)

b) Lily a/c Dr. 12,000


(Bill raised for the purchase made and accepted)


Noting chargesa/c Dr. 45

To Lily 12,045

(Bill dishonoured and noting charges paid by Lily)

d) Lily a/c Dr. 12,285


(Bill settled after paying 12% interest)

40. Kapil purchased goods for Rs.21,000 from Gaurav on 1.2.2006 and accepted a

bill of exchange drawn by Gaurav for the same amount. The bill was payable after one month. On 25.2.2002 Gaurav sent the bill to his bank for collection. The bill was duly presented by the bank. Kapil dishonoured the bill and the bank paid Rs.100 as noting charges. Record the necessary journal entries for the above transactions in the books of Kapil and Gourav.

• Solution: Journal entries in the books of Gaurav

Feb 01, 2006

a) Kapil a/c Dr. 21,000







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To Sales 21,000

(Goods sold to Kapil)


To Kapil 21,000




(Bill sent to the bank for collection before maturity)



(Bill has been collected by the bank)

e) Kapil a/c Dr. 21,100

To bank 21,100

(Bill dihonoured by the drawee on the due date and noting charges paid by the bank)

Journal entries in the books of Kapil


To Gaurav 21,000

(Goods purchased from Mr. Gaurav)

b) Gaurav a/c Dr. 21,000


(Bill accepted )



To Gaurav 21,100

(Accepted bill dishonoured and noting charges paid by the bank)







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41. On Feb. 14, 2006 Rashmi sold good Rs.7,500 to Alka. Alka paid Rs.500 in cash and for the bank balance accepted a bill of exchange drawn upon her by Rashmi payable after two months. On Apr.10, 2006 Alka approached Rashmi to cancel the bill since she was short of funds. She further requested Rashmi to accept Rs.2,000 in cash and draw a new bill for the balance including interest Rs.500. Rashmi accepted Alka’s request and drew a new bill for the amount due payable after 2 months. The bill was accepted by Alka. The new bill was duly met by Alka on maturity. Record the necessary journal entries in the books of Rashmi and Alka and prepared Alka’s account in the books of Rashmi’s and Rashmi’s account in the books of Alka’s

• Solution: Journal entries in the books of Rashmi

Feb 14, 2006

a) Alka a/c Dr. 7,500

To Sales 7,500

(Goods sold to Alka)

b) Cash a/c Dr. 500

To Alka 500

(Cash paid by Alka for the purchases made)


To Alka 7,000


April 10, 2006

d) Alka a/c Dr. 7,500


To Interest 500

(Old bill cancelled on the request of Alka due to non available of funds)

e) Cash a/c Dr. 2,000

To Alka 2,000

(Cash paid by Alka for the amount due)

April 14, 2006







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f) Bills receivable a/c Dr. 5,500

To Alka 5,500

(new bill raised for the remaining amount)

June 14, 2006

g) Bank a/c Dr. 5,500


(New bill met on due date)

Alka Account

Dr. Cr.


Feb 14, 2006 Sales 7,500 Feb 14, 2006 Cash 500

April 10, 2006 Bills receivable 7,000 Bills receivable 7,000

April 10, 2006 Interest 500 April 14, 2006

Cash 2,000

April 14, 2006


15,000 15,000

Journal entries in the books of Alka

Feb 14, 2006


To Rashmi 7,500

(Goods purchased from Rashmi)

b) Rashmi a/c Dr. 500

To Cash 500

(Paid cash to Rashmi)

c) Rashmi a/c Dr. 7,000


(Bill accepted)

d) Bills Payable a/c Dr. 7,000

Interest a/c Dr. 500







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To Rashmi 7,500

(Bill cancelled due to dishonor of bill)

e) Rashmi a/c Dr. 2,000

To Cash 2,000

(Paid cash to Rashmi)

April 14, 2006

f) Rashmi a/c Dr. 5,500


(New bill raised for the remaining amount)

g) Bills payable a/c Dr. 5,500

To bank 5,500

(New bill met on due date)

Rashmi Account

Dr. Cr.


Feb 14, 2006 Cash 500 Feb 14, 2006 Purchases 7,500

April 10, 2006 Bills Payable 7,000 Bills Payable 7,000

Interest 500

April 14, 2006 Cash 2,000

April 14, 2006 Bills Payable 5,500

15,000 15,000

42. Nikhil sold goods for Rs.23,000 to Akhil on Dec. 01, 2005. He drew upon Akhil

a bill of exchange for the same amount payable after 2 months. Akhil accepted the bill and sent it back to Nikhil. Nikhil discounted the bill immediately with his bank @12 p.a. On the due date Akhil dishonoured the bill of exchange and the bank paid Rs.100 as noting charges. Akhil requested Nikhil to draw a new bill upon him with interest @10% p.a. which he agreed. The new bill was payable after two months. A week before the maturity of the second bill Akhil requested Nikhil to cancel the second bill. He further requested to accept Rs.10,000 in cash immediately and drew a third bill upon him including interest of Rs.500. Nikhil agreed to Akhil’s request. The third bill was payable after one month. Akhil met the third bill on its maturity. record the necessary journal entries in the books of Nikhil and Akhil and also prepare Akhil’s account in the books of Nikhil and Nikhil’s account in the books of Akhil.

• Solution: Journal entries in the books of Nikhil







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Dec 01, 2005

a) Akhil a/c Dr. 23,000

To Sales 23,000

(Goods sold to Akhil)


To Akhil 23,000





(Bill discounted with the bank @ 12% p.a.)

Feb 01, 2005

d) Akhil a/c Dr. 23,100

To bank 23,100

(Bill dishonoured on due date and noting charges paid by bank)

e) Akhil a/c Dr. 385

To interest 385

(Interest due from Akhil)

f) Bills receivable a/c Dr. 23,485

To Akhil 23,485

(New bill raised after dishonor of the first bill)

Jan 25, 2005

g) Akhil a/c Dr. 23,485


(The bill cancelled on due date)







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h) Cash a/c Dr. 10,000

To Akhil 10,000

(Cash paid by Akhil to Nikhil)

i) Akhil a/c Dr. 500

To interest 500

(Interest due from Akhil)

j) Bills receivable a/c Dr. 13,985

To Akhil 13,485

To Interest 500

(New bill raised for the remaining amount along with interest)

k) Bank a/c Dr. 13,985


(Third bill met on maturity)

Akhil Account

Cr.



Feb 01, 2005 Bank 23,100 Feb 01, 2005 Bills receivable 23,485

Interest 385 Jan 25, 2005 Cash 10,000

Jan 25, 2005 Bills receivable 23,485 April 2005 Bills receivable 13,985

Interest 500

70,470 70,470

Journal entries in the books of Akhil

Dec 01, 2005


To Nikhil 23,000

(Goods purchased from Nikhil)

b) Nikhil a/c Dr. 23,000








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Feb 01, 2005



To Nikhil 23,100

(Accepted bill dishonoured on due date)

d) Interest a/c Dr. 385

To Nikhil 385

(Interest due to Nikhil)

e) Nikhil a/c Dr. 23,485


(New bill raised after the first bill was dishonoured on due date)

Jan 25, 2005

f) Bills payable a/c Dr. 23,485

To Nikhil 23,485

(Second bill cancelled)

g) Nikhil a/c Dr. 10,000

To Cash 10,000

(Cash paid to Nikhil)

h) Interest a/c Dr. 500

To Nikhil 500

(Interest due to the drawer)

i) Nikhil a/c Dr. 13,985


(New bill raised along with interest)







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j) Bills Payable a/c Dr. 13,985

To Bank 13,985

(Bill met on maturity)

Nikhil Account

Dr. Cr.


Dec 01, 2005 Bills Payable 23,000 Dec 01, 2005 Purchases 23,000

Feb 01, 2005 Bills Payable 23,485 Feb 01, 2005 Bills Payable 23,000

Jan 25, 2005 Cash 10,000 Feb 01, 2005 Noting charges 100

Jan 25, 2005 Bills Payable 13,985 Feb 01, 2005 Interest 385

Jan 25, 2005 Bills Payable 23,485

Interest 500

70,470 70,470

43. On Jan 01, 2006 Vibha sold goods worth Rs.18,000 to Sudha and drew upon

the latter a bill of exchange for the same amount payable after two months. Sudha accepted Vibha’s draft and returned the same to Vibha after acceptance. Vibha endorsed the bill immediately in favour of her creditor Geeta. Five days before the maturity of the bill Sudha requested Vibha to cancel the bill since she was short of funds. She further requested to draw a new bill upon her including interest of Rs.200. Vibha accepted Sudha’s request. Vibha took the bill from Geeta by making the payment to her in cash and cancelled the same. Then she drew a new bill upon Sudha as agreed. The new bill was payable after one month. The new bill was duly met by Sudha on maturity. Record the necessary journal entries in the books of Vibha.

• Solution: Journal entries in the books of Vibha

Jan 01, 2006

a) Sudha a/c Dr. 18,000

To Sales 18,000

(Goods sold to Sudha)


To Sudha 18,000


c) Geeta a/c Dr. 18,000


(Bill endorsed to geeta)







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Feb 24, 2006

d) Sudha a/c Dr. 18,000


(Bill cancelled five days before maturity)

e) Sudha a/c Dr. 200

To Interest 200

(Interest charged for the new bill)

f) Cash a/c Dr. 18,000

To Geeta 18,000

(Cash paid to Geetha and Vibha’s account with Geeta settled)

March 01, 2006

g) Bills receivable a/c Dr. 18,200

To Sudha 18,200

(New bill raised along with interest amount)

April 01, 2006

h) Bank a/c Dr. 18,200


(new bill met on due date)

44. On Jan. 01, 2006 Harsh accepted a months bill for Rs. 10,000 drawn on him by

tanu for latter’s benefit. Tanu discounted the bill on same day @ 8% p.a On the due date tanu sent a cheque to Harsh for honour the bill. Harsh duly honoured his acceptance. Record the journal entries in the Books of Tanu and Harsh.

• Solution: Journal entries in the books of Tanu

Jan 01, 2006


To Harsh 10,000







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(Bills raised and accepted by Harsh)


Discount a/c Dr. 66


(Discounted the bill with the bank)

Feb 01, 2006



(Bill me on the due date)

Journal entries in the books of Harsh

Jan 01, 2006

a) Tanu a/c Dr. 10,000



Feb 01, 2006


To bank 10,000

(Bill met by the drawee on due date)

45. Ritesh and Naina were in need of funds temporarily. On August 01 2005 Ritesh

drew upon Naina a bill for Rs. 12,000 for 4 months. Naina Accepted the bill and returned to Ritesh. Ritesh discounted the Bill @ 8% p.a. Half amount of the discounted bill remitted to Naina. On due date, Ritesh sent the required sum to Naina, who met the bill. Journalise the transaction in the books of both the parties.

• Solution: Journal entries in the books of Ritesh

Aug 01, 2005


To Naina 12,000







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(Bill raised on naina)




(Bill discounted with the bank)

Dec 01, 2005

c) Naina a/c Dr. 6,000

To Cash 5,840

To Discount 160

(Half the proceeds remitted to Naina)

Dec 01, 2005

d) Naina a/c Dr. 6,000

To Cash 6,000

(Half the amount of the bill sent to Naina to enable him to meet it)

Journal entries in the books of Naina

Aug 01, 2005

a) Ritesh a/c Dr. 12,000


(Bill accepted)



To Ritesh 6,000

(Amount received from Ritesh)

Dec 01, 2005

c) Cash a/c Dr. 6,000







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To Ritesh 6,000



To Bank 12,000

(Acceptance honoured)

46. On Jan. 01, 2006, bhanu and Naman drew on each other a bill for Rs. 8,000

payable 3 months after the due date for their Mutual benefit. On January 02 they discounted with their bank each other’s bill at 5% p.a. on the due date each met his Own’s acceptance. Give journal entry in the books of Bhanu and Naman.

• Solution: Journal entries in the books of Bhanu

Jan 01, 2006


To Naman 8,000

(Bill raised on Naman)







(Bill met on the due date)

d) Naman a/c Dr. 8,000


(Bill raised by Naman on Bhanu)









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(Bill met on due date by Naman)

f) Bills Payable a/c Dr. 8,000

To Bank 8,000


Journal entries in the books of Naman

Jan 01, 2006

a) Bhanu a/c Dr. 8,000


(Bill accepted)


To Bank 8,000

(Accommodation bill received)


To Bhanu 8,000

(Bill raised)







(Bill met on due date by Naman)

f) Bills Payable a/c Dr. 8,000

To Bank 8,000








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47. On Nov. 01, 2005 Sonia drawn a bill on sunny for Rs. 15,000 for 3 months for

mutual accommodation. Sunny accepts the bill and return it to sonia. Sonia discounted the same with his bankers @ 6% p.a. The proceeds are shared between sonia and sunny in proportion of 2/3rd, 1/3rd respectively. On the due date sonia remits his proportion to sunny who fails to met the bill and as a result sonia has to meet it. Sunny Give a fresh acceptance for the amount due to sonia plus interest of Rs. 100 sunny meet his second acceptance on due date. Record the necessary journal entries in the books of sonia and sunny.

• Solution: Journal entries in the books of Sonia

Nov 01, 2005

a) Bills Receivable a/c Dr. 15,000

To Sunny 15,000

(Bill raised on Sunny)

b) cash a/c Dr. 14,775



(Bill discounted with the bank @ 6%)

Feb 01, 2006

c) Sunny a/c Dr 15,000

To Cash 15,000

(Entire amount paid by Sonia on due date)

d) Sunny a/c Dr. 5,000


(Sunny failed to pay the remaining amount on due date)

e) Bills receivable a/c Dr. 5,100

To Sunny 5,000

To Interest ; 100

(Fresh bill raised along with interest amount)







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f) Bank a/c Dr. 5,100



Journal entries in the books of Sunny

Nov 01, 2005

a) Sonia a/c Dr. 15,000


(Accepted accommodation bill)

b) Sonia a/c Dr. 5,100


(New bill raised for the remaining amount)


To Sonia 5,100

(New bill met by Sunny on due date along with interest)







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Documents

1. Name any two types of commonly used negotiable ... 11TH... · 1. Name any two types of commonly used negotiable instruments. • S oluti n: Cheque and bill of exchange. 2. Write