14. Amar sold goods to Babu for Rs. 1,000. Babu accepted a bill for Rs. 1,000 drawn by
Amar. On the due date, Babu approached Amar and requested him to cancel the
original bill and the draw a new bill for Rs. 1,025 (including interest) which is agreed
by Amar. On the due date, the second bill was honoured. Show the journal entries in
the books of Amar
Answers
Answer:
1. BABU A/C DR 1000
TO SALES A/C 1000
2. BILLS RECEIVABLE A/C DR 1000
TO BABU A/C 1000
3. BABU A/C DR 1000
TO BILLS RECEIVABLE A/C 1000
4. INTEREST A/C DR 1025
TO CASH A/C 1025
5. BILLS RECEIVABLE A/C DR 1025
TO BABU A/C. 1025
6. CASH A/C DR 1025
TO BILLS RECEIVABLE A/C. 1025
Explanation:
Journal Entries:
In an organization's accounting system, a journal entry documents a commercial transaction. The foundation of the double-entry accounting method, which has been around for centuries, is made up of journal entries. Journal entries can be classified as either complex, adjusting, or reversing.
- Opening entries.
- Transfer entries.
- Closing entries.
- Adjusting entries.
- Compound entries.
- Reversing entries.
What Goes Into a Journal Entries?
Journal entries may include numerous pieces of information, but they often consist of the following: a header that describes the type of entry and the date that was entered;
- a special reference or identification number;
- the account(s), sum(s), and date(s) on which the transaction will debit those account(s);
- one or more accounts, the sums that will be credited by the transaction, and the date or dates that these credits are made; and
- a succinct explanation of the transaction
Additionally, information relevant to the company, such as the subsidiary or subsidiaries taking part in the transaction and the currency or currencies utilized, may be included in journal entries.
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