Priyanka owed Meena ₹18,000 Priyanka accepted a bill drawn Meena for the amount at 4 months. Meena endorsed the sane 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.


 

Give Journal Entries in the Books of Meena. 

 

Solution: 

 

Journal Entry  
In the Books of Meena 

Date 

Particulars 

L/F 

Debit ₹ 

Credit ₹ 

1. 

Bills Receivable A/c dr. 

To Priyanka A/c 

[Being a bill drawn]  

 

18,000 

 

18,000 

2. 

Sagar A/c Dr. 

To Bills Receivable A/c 

[Being bill endorsed with Sagar] 

 

18,000 

 

18,000 

3. 

Priyanka A/c Dr. 

To Sagar A/c 

[Being Priyanka request to cancel the bill] 

 

18,000 

 

18,000 

 




4. 

Cash A/c Dr. 

To Interest A/c 

To Priyanka A/c 

[Being Priyanka Paid 6000 immediately and on remaining amount 8% interest charge]  

 

6,240 

 

240 

6,000 

5. 

Bills Receivable A/c Dr. 

To Priyank A/c 

[Being a new bill is drawn] 

 

12,000 

 

12,000 

6. 

Priyanka A/c Dr. 

To Bills Receivable A/c 

[Being the new bill dishonored] 

 

12,000 

 

12,000 

7. 

Cash A/c Dr. 

Bad debts A/c Dr. 

To Priyanka A/c 

[Being only 50% of the amount recovered]  

 

6,000 

6,000 

 

 

12,000 

 

Calculation: 

Interest on remaining amount ₹12,000 @8% p.a. for 3 months 

=8/100*3/12 =240 

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