On 15th January, 2016, Sachin sold goods for 30,000 to Narain and drew upon the later a bill for the same amount payable after 3 months. The bill was accepted by Narain. The bill was discounted by Sachin from his bank for 29 250 on 31st January 2016. On maturity, the bill was dishonoured. He further agreed to pay 10,500 in cash including 2500 interests and accept a new bill for two months for the remaining *20.000. The new bill was endorsed by Sachin in favour of is creditor Kapil for settling a debt of 20,800. The new bill was duly met by Narain on maturity Record the necessary Journal entries in the books of Sachin.
Answers
Answer:
DateParticularsL.F.Amt. (Dr.)Amt. (Cr.)2016Jan 15Narain's A/c Dr. 30,000 To Sales A/c 30,000(Goods sold to Narain) –––––––––––––––––––––––––––––––––––––––––Jan 15Bills Receivable A/c Dr. 30,000 To Narain's A/c 30,000(Bills received from Narain) –––––––––––––––––––––––––––––––––––––––––Jan 31Bank A/c Dr. 29.250Discounting Charges A/c Dr.
Answer: The journal entries for the transactions described would be as follows:
Explanation:
15th January, 2016:
Debit: Accounts Receivable (Narain) 30,000
Credit: Sales 30,000
31st January, 2016:
Debit: Bank 29,250
Credit: Discount on Bills Receivable 250
Credit: Accounts Receivable (Narain) 29,000
On dishonour of bill:
Debit: Accounts Receivable (Narain) 20,000
Credit: Bad Debts 20,000
On acceptance of new bill:
Debit: Accounts Receivable (Narain) 20,000
Credit: Cash 10,500
Credit: Interest Income 2,500
On maturity of new bill:
Debit: Cash 20,000
Credit: Accounts Receivable (Narain) 20,000
On endorsing the bill in favor of Kapil:
Debit: Accounts Receivable (Kapil) 20,800
Credit: Accounts Receivable (Narain) 20,800
Please note that these journal entries are based on assumptions, it is always a good practice to check with the financial statements and the company's accounting policies.
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