Question

Question 26.
X sells goods for ₹ 40,000 to Y on 1st January, 2012 and on the same day draws a bill on Y at three months for the amount. Y accepts it and returns it to X, who discounted it on 4th January, 2018 with his bank at 6% p.a. The acceptance is dishonoured on the due date and the noting charges were paid by bank being ₹ 200.
On 4th April, 2018, Y accepts a new bill at three months for the amount then due to X together with interest at 12% p.a.
Make Journal entries to record these transactions in the books of X.

Answer 1

Answer:

X sells goods for ₹ 40,000 to Y on 1st January, 2012 and on the same day draws a bill on Y at three months for the amount. Y accepts it and returns it to X, who discounted it on 4th January, 2018 with his bank at 6% p.a. The acceptance is dishonoured on the due date and the noting charges were paid by bank being ₹ 200.

On 4th April, 2018, Y accepts a new bill at three months for the amount then due to X together with interest at 12% p.a.

Make Journal entries to record these transactions in the books of X.

Answer 2

The journal entries in the books of X are shown below:

Explanation:

The journal entries in the books of X are as:

2012

Jan 1

Y's A/c..................................Dr   Rs 40,000

    To Sales A/c..........................Cr  Rs 40,000

Being sales made to Y on credit is recorded

Jan 1

Bills Receivable A/c..............................Dr  Rs 40,000

          To Y A/c.............................................Cr  Rs 40,000

Being Y acceptance received

Jan 4

Bank A/c...........................................Dr Rs 39,400

Discounting Charges A/c..............Dr Rs 600

          To Bills Receivable A/c................Cr  Rs 40,000

Being bill discounted at 6% p.a

April 4

Y's A/c.....................................Dr  Rs 40,200

    To Bank A/c..............................Cr   Rs 40,200

Being bill dishonoured and noting charges are paid

April 4

Y's A/c.................................Dr   Rs 1,206

       To Interest A/c...............Cr  Rs 1,206

Being interest due from 3 months

April 4

Bills Receivable A/c.....................Dr Rs 41,406

        To Y's A/c.......................................Cr    Rs 41,406

Being acceptance received from Y

Working Note:

Discounting charges = Rs 40,000 × 6 × 3/ 100 × 12

= Rs 600

Interest = Rs 40,200 × 12 × 3 / 100 × 12

= Rs 1,206