Question 24.
On 1st January, 2018 for goods sold, Ramesh drew a Bill of Exchange on Mahesh for ₹ 4,000, for a period of 3 months. Mahesh accepts it and returns to Ramesh. Ramesh then endorses it to Mukesh who in turn endorses it to Suresh on 1st February, 2018. The bill is then discounted by Suresh on the same date with his banker at 5% p.a. On the due date the bill is dishonoured.
Pass the necessary Journal entries in the books of all the four parties.
Answers
Journal Entries in the books of all 4 parties
Explanation:
In the Books of Ramesh
Journal:
1.1.18 Mahesh A/c Dr. Rs.4,000
To Sales A/c Rs.4,000
(Being goods sold to Mahesh on credit)
Bills Receivable A/c Dr. Rs.4,000
To Mahesh A/c Rs.4,000
(Being bill drawn on Mahesh)
4.4.18 Mahesh A/c Dr. Rs.4,000
To Mukesh A/c Rs.4,000
(Being Bill drawn on Mahesh endorsed to creditor Mukesh)
In the Books of Mahesh
Journal:
1.1.18 Purchases A/c Dr. Rs.4,000
To Ramesh A/c Rs.4,000
(Being goods bought from Ramesh on credit)
1.1.18 Ramesh A/c Dr. Rs.4,000
To Bills Payable A/c Rs.4,000
(Being bill drawn by Ramesh accepted)
4.4.18 Bills Payable A/c Dr. Rs.4,000
To Ramesh A/c Rs.4,000
(Being bill dishonored)
In the Books of Mukesh
Journal:
1.1.18 Bills Receivable A/c Dr. Rs.4000
To Ramesh A/c Rs.4000
(Being bill received from Ramesh)
1.2.18 Suresh A/c Dr. Rs.4,000
To Bills Receivable A/c Rs.4,000
(Being bill further endorsed to Suresh)
4.4.18 Ramesh A/c Dr. Rs.4,000
To Suresh A/c Rs.4,000
(Being bill dishonored)
In the Books of Suresh
Journal:
1.2.18 Bill Receivable A/c Dr. Rs.4,000
To Mukesh A/c Rs.4,000
(Being bill received from Mukesh)
1.2.18 Bank A/c Dr. Rs.3,967
Discounting Charges A/c Dr. Rs.33
To Bills Receivable A/c Rs.4,000
(Being bill discounted from bank @5% p.a for 2 months)
4.4.18 Mukesh A/c Dr. Rs.4,000
To Bank A/c Rs.4,000
(Being bill dishonored)
Answer:
IN THE BOOKS OF RAMESH :
1.01.17
Suresh A/c Dr 15000
To Sales A/c 15000
(Being goods sold to Suresh. )
1.01.17
Bill's Receivable A/c Dr 15000
To Suresh A/c 15000
(Being Acceptance received from Suresh for 3 months. )
04.04.17
Suresh A/c Dr 15000
To Bill's Receivable A/c 15000
(Being Acceptance dishonored or
Bill dishonored. )
IN THE BOOKS OF SURESH:
1.01.17
Purchases A/c Dr 15000
To Ramesh A/c 15000
(Being goods purchased. )
1.01.17
Ramesh A/c Dr 15000
To Bill's Payable A/c 15000
(Being acceptance given for 3 months.)
04.04.17
Bills Payable A/c Dr 15000
To Ramesh A/c 15000
(Being acceptance dishonored or bill dishonored.)