Question

On 1st July, 2017, A drew a bill for ₹ 5,000 on B payable after 3 months. A discounted it with the Bank for ₹ 4,850. On maturity B failed to pay the amount of his acceptance and the bank had to pay ₹ 50 as noting charges.
Draw up the necessary Journal entries in the books of A and B.

Answer 1

Answer: Due date would be October 4, 2017

In the books of A:

Date:2017 July 1

Particulars:

(1)Bills receivable A/C dr. 5000

To B. 5000

(2)Bank A/C dr. 4850

Discounting charges A/C dr. 150

To bills receivable A/C. 5000

(3)Date: 2017 October 4

Particulars:

B. dr. 5050

To bank A/C. 5050

In the books of B:

Date:2017 July 1

Particulars:

(1)A. dr. 5000

To bills payable. 5000

(2)No entry in the books of B when A discounts the bill from bank

(3)Date:2017 October 4

Particulars:

Bills payable A/C. dr. 5000

Noting charges A/C. dr. 50

To A. 5050

Answer 2

Concept: Bill o exchange is a written  order that binding one party to pay  a fixed amount to another party on demand for a predetermined date.

Given: A drew a bill for Rs. 5,000 on B payable after 3 months.

Find: Keep journal entries in the books of B.

Solution:

                              In the books of B

                              Journal entries

Date         Particulars                                          L.F.    Dr.        Cr.

2017

July 1        A                                       Dr.                     5000

               To bills payable A/C                                                5000

               (Being bill drawn by A)

Oct 4         Bills payable A/C              Dr.                    5000

                Noting charges A/c           Dr.                         50

                To A                                                                           5050

                (Being bills payable dishonoured)

#SPJ3