Sayali sold goods on credit to manali for rs. 40000. Sayali draws a bill on manali for 4 months for the amount due. Manali accepted the bill and returned it to sayali. After a month, sayali discounted the bill with her bank at 12% p.A. On the due date, bank informed that the bill is dishonored and bank paid the noting charges rs. 300. Manali requested sayali to renew the bill. Sayali agreed on conditions that manali should pay rs. 20000 in cash along with noting charges and accept a new bill for the balance amount with interest at 15% p.A. For 3 months. These arrangements were carried through. Before the due date manali was declared insolvent and only 40% of the amount could be recovered from her private estate as final dividend. Give journal entries in the books of sayali
Answers
Journal Entries for the given transactions
Explanation:
In the Books of Sayali
Journal Entries:
1) Manali A/c Dr. Rs.40,000
To Sales A/c Rs.40,000
(Being goods sold to Manali on credit)
2) Bills Receivable A/c Dr. Rs.40,000
To Manali A/c Rs.40,000
(Being bill drawn upon Manali by Sayali)
3) Bank A/c Dr. Rs.38800
Discount A/c Dr. Rs.1200
To Bills Receivable A/c Rs.40,000
(Being bill discounted via bank @12% p.a)
4) Manali A/c Dr. Rs.40,300
To Bank A/c Rs.40,300
(Being bill dishonored and Noting charges charged to Manali)
5) Manali A/c Dr. Rs.750
To Interest A/c Rs.750
(Being interest charged from Manali)
6) Cash A/c Dr. Rs.20300
To Manali A/c Rs.20300
(Being payment received from Manali)
7) Bills Receivable A/c Dr.Rs.20750
To Manali A/c Rs.20750
(Being new bill drawn upon Manali with interest)
8) Manali A/c Dr. Rs.20750
To B/R A/c Rs.20750
(Being new bill dishonored)
9) Cash A/c Dr. Rs.8300
Bad debts A/c Dr. Rs.12450
To Manali A/c Rs.20750
(Being Manali insolvent and 40% amount due recovered)