On 1st Jan. 2020 Hemant sold goods of ₹18,500 to Nitin. On the same date Hemant drew a bill of exchange for ₹ 18,500 at 2 months. On the due date the bill was daily honored. Give Journal Entries in the Books of Hemant and Nitin. Prepare Hemant’s account in the books of Nitin.

Give Journal Entries in the Books of Hemant and Nitin. Prepare Hemant’s account in the books of Nitin. 

Solution:

Journal Entry  
In the Books of Hemant (Drawer) 

Date	Particulars	L/f	Debit ₹	Credit ₹
2020
1st Jan.	Nitin A/c Dr.  To Sales A/c  [Being Goods sold to Nitin on Credit]		18,500	18,500
1st Jan.	Bills Receivable A/c Dr.  To Nitin A/c  [Being drew a bill of exchange at 2 months]		18,500	18,500
3rd March	Cash A/c Dr.  To Bills Receivable A/c  [Being Bill was duly honored]		18,500	18,500

 

In the Books of Nitin. (Drawee) 

Date	Particulars	L/f	Debit ₹	Credit ₹
2020
1st Jan.	Purchase A/c Dr.  To Hemant A/c  [Being purchase good from hemant o credit]		18,500	18,500
1st Jan	Hemant A/c Dr.  To Bills Payable  [Being Hemant drew bill of exchange for 2 months]		18,500	18,500
3rd March	Bills Payable A/c Dr.  To Cash A/c  [Being bill was duly honored]		18,500	18,500

Explanatory Note:

In the Books of Hemant

1. On 1st January Hemant Sold goods to Nitin.

Therefore passing sales entry.

2. On the same date Hemant drew bill of exchange for ₹18,500 at 2 months and Nitin Accepted the bill of exchange.

Therefore, Bills Receivable account is debited and Nitin Debtor is credited

3. After 2 months the bill was honored.

Received Cash and bill was completed.

In the Books of Ntin

This all entries are opposite to Hemant Journal Entries

1. 1st January purchased goods from Hemant

Therefore passed Journal Entries

2. Accept the Bill of exchange

3. Paid cash to Hemant and honored the bill on the due date.