Question

On 18th August 2016, Paul draws a bill for ₹ 20,000 on Gavin for a period of 3 months. Gavin

accepted and returned the bill on the same day.

On 18th September, Paul discounted the bill with the bank @ 15% p.a. Before due date, Gavin

dishonoured his acceptance. Bank paid noting charges ₹ 100. He requested Paul to renew the

bill for a further period of 2 months.

Paul agreed to renew the bill on the condition that 40% of amount is paid immediately in cash

along with the noting charges. Gavin agreed and accepted a new bill for remaining amount and

₹ 250 interest. However before due date, Gavin was declared insolvent and could not recover

any amount from his private estate.

You are required to pass journal entries in the books of Paul
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Answer 1

Explanation:

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