On 1st January, 2017, X sold goods to Y of the list price Rs. 1,00,000 at a trade discount of 10%. Y gave 3
promissory notes to X for 1 month, 2 months and 3 months respectively for the amount due in ratio 2:4:3.
The first promissory note was retained by X till maturity. Second promissory note was endorsed by X to his
creditor, Z in full settlement of his claim for Rs. 41,500. The third promissory note was discounted by X from
his bank on February 4, 2017 @12% p.a.
Pass the necessary journal in the books of X and Y assuming that all the promissory notes were met on their
due date.
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Answers
Answer:
In the books of X
01.01.2017
Y's A/C Dr 90000
To Sales A/C 90000
Promissory Note 1 A/C Dr. 20000
Promissory Note 2 A/C Dr. 40000
Promissory Note 3 A/C Dr. 30000
To Y's A/C 90000
Z's A/C Dr. 41500
To Promissory Note 2 A/C 40000
To Discount Received A/C 1500
01.02.2017
Bank/Cash A/C Dr. 20000
To Promissory Note 1 A/C 20000
04.02.2017
Bank A/C Dr. 29448
Discount A/C Dr. 552
To Promissory Note 3 A/C 30000
In the books of Y
01.01.2017
Purchases A/C Dr 90000
To X's A/C 90000
X's A/C Dr. 90000
To Promissory Note 1 A/C Dr. 20000
To Promissory Note 2 A/C Dr. 40000
To Promissory Note 3 A/C Dr. 30000
01.02.2017
Promissory Note 1 A/C Dr. 20000
To Bank/Cash A/C 20000
01.03.2017
Promissory Note 2 A/C Dr. 40000
To Bank/Cash A/C 40000
01.04.2017
Promissory Note 3 A/C Dr. 30000
To Bank/Cash A/C 30000