Question

14. Record the following transactions in the books of Mehra :
Ram's acceptance for 20,000 renewed for 3 months, plus interest at 5%
p.a.
shyams acceptance for rs 4500 due this day returned dishonoured. noting charges rs 10
​

Answer 1

Answer:

In books of Mehra

Ram. Dr. 250

To interest account. 250

Bills receivable account Dr 20250

To Ram. 20250

interest= 20000×5/100×3/12=250

Shyam. Dr. 4510

To B/ R account. 4500

To cash account. 10

In case of Ram the bill is renewed for 3 months so Mehra charge interest for 3 months but Ram not paid Interest in cash so ist entry for interest due and second entry for renewal of Bill . bill + , interest amount (20000+250)

In case of Shyam the bill is dishonoured and Mehra paid noting charges so entry will pass for dishonor of Bill. Noting charges paid will recover from Shyam