Question

Question 42.
On 1st January, 2008, A sold goods to B for ₹ 1,00,000 received ₹ 25,000 in cash and drew two bills, first ₹ 45,000 and second for ₹ 30,000 of two months each. Both bills were duly accepted by B. First bill was endorsed to C in settlement of his account of ₹ 45,000 and second bill was discounted from the bank at the rate of 12% p.a. On the due date of these bills, both bills were dishonoured, C has paid ₹ 100 and bank has paid ₹ 80 as noting charges. Pass Journal entries in the books of A, B and C.

Answer 1

Correct journal entries are -

B's A/c 1,00,000

To Sales A/c 1,00,000

( Being goods sold to B)

Cash A/c 25,000

Bills Receivable 45,000

Bills Receivable  30,000

To B's A/c 1,00,000

( Being cash and acceptance received from B)

C's A/c 45,000

To Bills Receivable A/c 45,000

( Being bill endorsed in favour of C)

Bank A/c 29,400

Discount Charges 600

To Bills Receivable 30,000

( Being bill discounted with bank @ 12%)

B's A/c 45,100

To C's A/c 45,100

( Being B's acceptance endorsed)

B's A/c 30,080

To Bank A/c 30,080

( Being B's acceptance discounted)