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. 

 

Solution:

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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