Question

Question 8.
A owed B ₹ 8,000. He gave a bill for the same on 1st August, 2017 payable after 4 months at the Bank of India. Chandni Chowk, Delhi. Immediately after receiving the bill, B endorsed it to C in payment of his debt. On 1st Sepetember, C discounted the bill at 12% p.a. The bill is met on due date. Pass the necessary Journal entries in the books of A, B and C.

Answer 1

Journal Entries in the books of A,B and C respectively.

Explanation:

                                          In the Books of A

Journal:

B A/c         Dr. Rs.8000

  To Bills Payable A/c   Rs.8000

(Being bill accepted)

Bills Payable A/c   Dr. Rs.8000

    To Bank A/c                  Rs.8000

(Being bill accepted satisfied on maturity)

                                            In the Books of B

Journal:

Bills Receivable A/c         Dr. Rs.8000

      To A A/c                                Rs.8000

(Being bill drawn on A)

C A/c           Dr. Rs.8000

        To Bills Receivable A/c  Rs.8000

(Being bill endorsed to creditor C)

                                             In the Books of C

Journal:

Bills Receivable A/c      Dr. Rs.8000

     To B A/c                              Rs.8000

(Being bill receivable received from B)

Bank A/c                 Dr. Rs.7760

Disct. Charges A/c Dr. Rs.240  

                     To Bill Receivable A/c    Rs.8000

(Being B/R discounted with bank @12% p.a for 3 months)