Question

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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Answer 1

Answer:

Option A is the correct one.

The Journal entry for recording the dishonor of a bill will be:

Y (Debtors) a/c Dr 10000

To Bills receivable A/c 10000

( Being bill dishonored)