Question

Journalise the following in the books of Mohan: (I) Mohan's acceptance to Sohan for 20,000 renewed at 3 months together with interest @ 18% p.a.(2) Shyam requests Mohan to renew his acceptance for 15,000 for 2 months. Mohan agrees to it provided interest is paid @ 10% in cash.​

Answer 1

Answer:

Journal Entries

In the books of Mohan:

1. Bills payable A/c                                     Dr.                 20000

       To Mohan                                                                            20000

(Being bills payable to Dinesh cancelled for

renewal)

Interest A/c                                                 Dr.                900

        To Mohan                                                                           900

(Being interest due to Sohan for 3 months)

Sohan A/c                                                 Dr.                 20900

        To Bills Payable                                                               20900

(Being new bills payable issued to Sohan)

2. Shyam  A/c                                            Dr.                 15000

        To Bills receivable                                                              15000

(Being bills receivable of  Shyam cancelled for

renewal)

Cash A/c                                                  Dr.                  500

        To Interest A/c                                                                  500

(Being interest received from Shyam in cash)

Bills Receivable A/c                                 Dr.                  15000

        To Rajan                                                                             15000

(Being new bill received from Shyam)                    

3. Bills Receivable A/c                            Dr.                   15000

       To mohan A/c                                                                      15000

(Being new bill receivable from Shyam )

Cash A/c                                                  Dr.                     250

        To Interest A/c                                                                     250

(Being interest received from Mohan in cash)  

Explanation:

Meaning of Journal Entries:

A Journal is a book in which all the transactions of a business are recorded for the first time. The process of recording transactions in the journal is called journalising. Every transaction affects two accounts, one is debited and the other one is credited.

1.Opening entries:

The beginning balance for the current accounting period is the ending balance from the previous accounting period, which is carried over in these entries.

2.Transfer entries.

An expense or an income is transferred, or allocated, from one account to another in a transfer entry.

3.Closing entries.

With the help of these entries, an accounting period is ended at a balance that can later be moved from a temporary account to a permanent one or from one accounting period to the next.

4.Adjusting entries.

According to the accrual method of accounting, adjusting entries are entries that document changes to accounts that aren't otherwise accounted for in the journal.

5.Compound entries.

These entries list many accounts that are going to be credited or debited.

6.Reversing entries.

An adjusting entry that was made at the conclusion of the preceding accounting period is reversed or undone by reversing entries, which are made at the commencement of a new accounting period.

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