B owes A ₹ 4,000. On 1st January, 2018, B accepts a 3 months bill for ₹ 3,900 being in full settlement of the claim. At its due date the bill is dishounoured. Nothing charges ₹ 50 are paid by A. Give the Journal entries in the books of A and B.
Answers
Answer:
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Following are the journal entries for this question:
In the books of A:
1) Bill receivable a/c dr. 3,900
discount allowed a/c dr. 1,000
to B's a/c 4,000
(being bill accepted by B and discount allowed to him)
2) B's a/c dr. 4,050
to bill receivable a/c 3,900
to discount allowed a/c 100
to cash a/c 50
( being bill dishonored and noting charges paid ₹50)
In the books of B:
1) A's a/c dr. 4,000
to bills payable a/c 3,900
to discount received a/c 100
(being bill issued by A accepted and discount received)
2) Bills payable a/c dr. 3,900
discount receivable a/c dr. 100
Noting charges a/c dr. 50
to A's a/c 4,050
(being bills payable dishonored)