Question

On Oct 1 , 2017 , Modi sold goods to Reddy for 12,000 and drew upon him a bill at 3 months for that amount . On Nov. On 1 , 2017 , Modi purchased goods from Patnaik valued at 25,000 and in payment he handed over to Patnaik , Reddy's acceptance and a check for 12,660 , Patnaik allowing 340 as discount . On maturity , Reddy's bill was dishonoured which Modi had to take it up and discount disallowed. Reddy then. pays 4,100 in cash to Modi , including interest 100 and accepts another bill for the remaining amount for 2 months . The second bill is met on due date. Show the necessary entries in the books of all the three parties .​

Answer 1

Answer:

On Oct 1 , 2017 , Modi sold goods to Reddy for 12,000 and drew upon him a bill at 3 months for that amount . On Nov. On 1 , 2017 , Modi purchased goods from Patnaik valued at 25,000 and in payment he handed over to Patnaik , Reddy's acceptance and a check for 12,660 , Patnaik allowing 340 as discount . On maturity , Reddy's bill was dishonoured which Modi had to take it up and discount disallowed. Reddy then. pays 4,100 in cash to Modi , including interest 100 and accepts another bill for the remaining amount for 2 months . The second bill is met on due date. Show the necessary entries in the books of all the three parties .

Answer 2

Answer: Here are the necessary entries in the books of Modi, Reddy, and Patnaik:

Modi's Books:

Oct 1, 2017:

Debit: Accounts Receivable (Reddy) 12,000

Credit: Sales 12,000

Nov 1, 2017:

Debit: Accounts Payable (Patnaik) 25,000

Debit: Bank 12,660

Credit: Accounts Receivable (Reddy) 12,000

Credit: Discount Allowed 340

Dec 3, 2017 (Dishonour of Reddy's Bill):

Debit: Bank 4,100

Credit: Accounts Receivable (Reddy) 4,100

Jan 3, 2018 (Acceptance of second bill by Reddy):

Debit: Accounts Receivable (Reddy) 8,000

Credit: Bank 8,000

Reddy's Books:

Oct 1, 2017:

Debit: Accounts Payable (Modi) 12,000

Credit: Sales 12,000

Jan 3, 2018:

Debit: Bank 4,100

Debit: Accounts Payable (Modi) 8,000

Credit: Cash 4,100

Patnaik's Books:

Nov 1, 2017:

Debit: Accounts Receivable (Modi) 25,000

Credit: Sales 25,000

Credit: Discount Allowed 340

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