Question 32.
On 1st June, 2017 A sold goods to B for ₹ 250. B gave to A his acceptance payable 1 month after date. Before maturity B requests A to renew it, which A does adding ₹ 10 to the new bill for interest. Make the necessary Journal entries to record these transactions in the books of both A and B.
Answers
The journal entries in the books of A and B are shown below:
Explanation:
The journal entries are shown as:
In the books of A
B's A/c...............................Dr Rs 250
To Sales A/c......................Cr Rs 250
Being sales made to B
Bills Receivable A/c.......................Dr Rs 250
To B's A/c.................................Cr Rs 250
Being acceptance received from B
B's A/c.....................................................Dr Rs 250
To Bills Receivable A/c.......................Cr Rs 250
Being B's acceptance is cancelled
B's A/c.....................................................Dr Rs 10
To Interest A/c..............................Cr Rs 10
Being interest due from B on cancelling first bill
Bills Receivable A/c.......................Dr Rs 260
To B's A/c.................................Cr Rs 260
Being new bill acceptance with interest
In the books of B
Purchases A/c................................Dr Rs 250
To A's A/c..................................Cr Rs 250
Being goods purchased from A
A's A/c......................................Dr Rs 250
To Bills Payable A/c............Cr Rs 250
Being bill drawn by A accepted
Bills Payable A/c........................Dr Rs 250
To A's A/c..................................Cr Rs 250
Being bill got cancelled
Interest A/c...............................Dr Rs 10
To A's A/c..............................Cr Rs 10
Being interest due for cancelling the bill
A's A/c......................................Dr Rs 260
To Bills Payable A/c............Cr Rs 260
Being new bill accepted with interest
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