Question

On 15th April, 2015, A agrees to draw on B, who is his debtor for Rs. 24,000, three bills for exchange No. 1 for Rs. 7,000 at 1 month. No. 2 for Rs. 8,000 at 2 months, and No. 3 for Rs. 9,000 at 3 months. B accepts and returns these bills to A. On 20th April, 2015, A endorses the first bill to his creditor C in full installment his account for Rs. 7,100. He discounts the second bill on 22nd April, 2015 for Rs. 7,920. The first bill is met on maturity. The second bill is dishonoured, Rs. 100 being the noting charges. A agrees to draw on B a fourth bill for Rs. 8,250 at 3 months. The third and fourth bills are met on due dates. Record journal entries in the books of A, B and C.​

Answer 1

Explanation:

                                       Journal in the books of C

  Date                                   Particulars                                 Debit          Credit      

  2015

20th Apr    Bills Receivable a/c                                     dr     7100

                             To A a/c                                                                        7000

                             To Interest Received a/c                                               100

              [being A endorsed B's bill of 1 month to C]

18th May    Cash a/c                                                       dr     7100

                             To Bills Receivable a/c                                                7100

              [being cash received on maturity date]    

Note : Journal of A and B given in attachment below.