Question 5.
Vinod sold goods to Darbara Singh for ₹ 1,000. He drew on the latter a bill for the amount payable 3 months after date.He discounted the bill with his bankers for ₹ 990. On maturity, the bill is duly met. Make the Journal entries in the books of Vinod and Darbara Singh.
Answers
The journal entry in the books of V and D are shown below:
Explanation:
The journal entry in the books of Vinod (V) is as:
Darbara Singh A/c..........................Dr Rs 1,000
Sales A/c..........................................Cr Rs 1,000
Being goods sold to D
Bills Receivable A/c.............................Dr Rs 1,000
Darbara Singh A/c...............................Cr Rs 1,000
Being bill accepted by D
Bank A/c................................Dr Rs 990
Discount Charges A/c.........Dr Rs 10
Bills receivable A/c...........Cr Rs 1,000
Being D accepted the bill which is discounted at 9% for 3 months
The journal entry in the books of Darbara (D) is as:
Purchases A/c................................Dr Rs 1,000
Vinod A/c.........................................Cr Rs 1,000
Being goods bought by V
Vinod A/c.........................................Dr Rs 1,000
Bills Payable A/c...........................Cr Rs 1,000
Being bill drawn by V
Bills Payable A/c...........................Dr Rs 1,000
Bank A/c..........................................Cr Rs1,000
Being bill is paid on its due date