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
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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
Muneerakhan:
sangeeta please can i have it more clearly....
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