Question

A sold goods to B for rupees 10000 on 1st Jan 2019. he drew upon him a bill for rupees 10000 for 3 months. B accepted the bill and returned it to A. On the same date, A discounted the bill which is the bank at the rate of 10% per annum. The bill was Dishonored on the due date and the bank paid rupees 50 as noting charges Mr. A agreed to accept sum of rs 5300 in cash from B and agreed to draw another bill of 5000 for 3 months. B accepted the 2nd bill and returned it to A. before the due date of this bill B become insolvent and a dividend of 40 paise in a rupee was received from his estate.

Answer 1

Option A is the correct one.

The Journal entry for recording the dishonor of a bill will be:

Y (Debtors) a/c Dr 10000

To Bills receivable A/c 10000

( Being bill dishonored)