Uday purchased goods from Shankar on Credit for ₹35,0000 at 10% Trade Discount. Uday paid ₹1,500 immediately and for the balance accepted a bill for 3 months. Before 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.

 
Give Journal Entries in the Books of Shankar. 

 
Journal Entry  
In the Books of Shankar. 

Solution:

Date	Particulars	J.F	Debit ₹	Credit ₹
1	Uday A/c Dr.  To Sales A/c  [Being Goods sold to Uday on credit @10% Trade Discount]		31,500	31,500
2	Cash A/c Dr.  To Uday A/c  [Being Received cash from Uday]		30,000	30,000
3	Bills Receivable A/c Dr.  To Uday A/c  [Being the bill is drawn and accepted]		30,000	30,000
4	Uday A/c Dr.  To Bills Receivable A/c  [Being Uday request to cancel bill]		30,000	30,000
5	Uday A/c Dr.  To Interest A/c  [Being interest due to Uday]		900	900
6	New Bill receivable A/c Dr.  To Uday A/c  [Being the new bill drawn and accepted]		30,900	30,900

 

Calculation: 

Interest = 30,000*3/12*12/100 = 900