Sagar drawn an after sight bill on 21st Nov. 2019 for ₹21,000 at 3 months on Prasad. The bill is discounted by sagar at 8% p.a. with his bank. O maturity, Prasad finds himself unable to make payment of the bill and request Sagar to renew it. Sagar accepts the request and draws a new bill at one month for ₹21,750 including interest which was duly accepted by Prasad. Sagar deposits the bill into bank for the collection. Prasad honors the bill on the due date and bank charges ₹250 as Bank Charges. Pass Necessary Journal Entries in the Books of Sagar and prepare Sagar’s account in the Books of Prasad.
Sagar drawn an after sight bill on 21st Nov. 2019 for ₹21,000 at 3 months on Prasad. The bill is discounted by sagar at 8% p.a. with his bank. O maturity, Prasad finds himself unable to make payment of the bill and request Sagar to renew it. Sagar accepts the request and draws a new bill at one month for ₹21,750 including interest which was duly accepted by Prasad. Sagar deposits the bill into bank for the collection. Prasad honors the bill on the due date and bank charges ₹250 as Bank Charges.
Pass Necessary Journal Entries in the Books of Sagar and prepare Sagar’s account in the Books of Prasad.
Journal Entry
In the Books of Sagar.
Date | Particulars | L.F | Debit ₹ | Credit ₹ |
2019 |
|
|
|
|
21 Nov. | Bill Receivable A/c Dr. To Prasad [Being bill drawn and accepted by Prasad |
| 21,000 |
21,000 |
21 Nov. | Bank A/c Dr. Discount A/c Dr. To Bills Receivable A/c [being bill discounted with bank] |
| 20,580 420 |
21,000 |
24 Feb. | Prasad A/c Dr. To Bank A/c [Being the bill cancel] |
| 21,000 |
21,000 |
|
24 Feb. | Prasad A/c Dr. To Interest A/c [Being interest due to Prasad] |
| 750 | 750 |
24 Feb. | New Bill Receivable A/c Dr. To Prasad/c [Being the new bill drawn and accepted] |
| 21,750 |
21,750 |
24 Feb.
| Bill Sent for collection A/c Dr. To New Bill Receivable A/c [Being new Bill sent for collection]
|
| 21,750 |
21,750 |
27 March | Bank A/c Dr. Bank Charges A/c Dr. To Bill Sent for collection A/c [Being the honors] |
| 21,500 250 |
21,750
|
Ledger Account
In the Books of Prasad
|
Dr. Sagar’s Account Cr. |
Date
| Particulars | J.F | Amount | Date | Particulars | J.F | Amount |
2019 |
|
|
| 2019 |
|
|
|
21 Nov. | To Bills Payable A/c |
| 21,000 | 21 Nov. | By Balane b/d |
| 21,000 |
24 Nov. | To Bills payable |
| 21,750 | 24 Feb. | By Bills Payable |
| 21,000 |
|
|
|
|
|
|
|
|
|
|
|
| 24 Feb. | By Balance c/d |
| 750 |
|
|
| 42,750 |
|
|
| 42,750 |
|
|
|
|
|
|
|
|
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