Sangeeta accepted a bill for ₹18,000 dawn by Geeta at 3 months. Geeta Discounted the bill for ₹17,400. Before the due date Sangeeta approached Geeta for renewal of the bill. Geeta agreed on the condition that Sangeeta should pay ₹6,000 immediately and for the balance she should accept a new bill for 4 months along with interest ₹550. The arrangements were carried through. But on the due date of new bill Sangeeta became insolvent and 35 paisa in a rupee could be recovered from her estate. Give Journal Entries in the Books of Sangeeta and prepare Sangeeta ‘s account in the books of Geeta.

 

Give Journal Entries in the Books of Sangeeta and prepare Sangeeta ‘s account in the books of Geeta. 

 

Solution: 

Journal Entry 

In the Books of Sangeeta. 

Date	Particulars	L/F	Debit ₹	Credit ₹
1.	Geeta A/c Dr.  To Bills Payable A/c  [Being accepted a bill]		18,000	18,000
2.	Bills payable A/c Dr.  To Geeta A/c   [Being bill cancel and approach for new bill]		18,000	18,000
3.	Geeta A/c Dr.  To Bank A/c  [Being part amount paid immediately]		6,000	6,000
4.	Interest A/c Dr.  To Geeta A/c  [Being interest paid on balance amount]		550	550
5.	Geeta A/c Dr.  To New bill Payable A/c  [Being accepted new bill for 4 monhs]		12,550	12,550
6.	New Bills Payable A/c Dr.  To Geeta A/c  [Being the new bill get dishonored]		12,550	12,550
7.	Geeta A/c Dr.  To Cash A/c  To Deficiency A/c  [Being Sangeeta became insolvent and pay 35 paisa in a rupee]		12,550	4,393  8,157

Ledger account 
In the Books of Geeta  

Dr. Sangeeta Account Cr.

Date	Particulars	J.F	Amount	Date	Particulars	J.F	Amount
	To Balance b/d		18,000	1	By Bill Receivable		18,000
2.	To Bank A/c		18.000	4.	By Bank A/c		6,000
4.	To Interest		550	5.	By Bills Receivable		12,550
6.	To Bills Receivable		12,550	7.	By Cash A/c		4,393
					By Bad Debts		8,157
			49,100				49,100