Question

Tkali draws a bill of * 1,000 on John on August 5. The bill is payable after 6 months
The bill was accepted by the drawee on presentation and met on the due date. Show the transaction on books of both the parties
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Answer 1

Answer:

Let me give you the correct journal Entries....

1] In the books of Ikali--

August 5. John A/c Dr 1000

To Sales A/c 1000

( being the goods sold to john on credit )

In the question the bill is drawn of 1000 rs therefore we assume that the sale is of 1000 rs. We debited john account as he is reciever.

August 5. Bills Recievable A/c Dr 1000

To John A/c 1000

( being the bill is drawn for 6 months )

Bills recievable is Debited as it is an Asset and john is credited as he is a giver.

February 5. Bank A/c Dr 1000

( Next year)

To Bills Recievable A/c 1000

Bank Account is debited as it is real account and bills recievable is credited as the asset is decreasing. Now if you imagine the john Account in book of Ikali then you can see that johns account is tally and you have got the cash in place of bills recievable.

2] In the books of John..

August 5. Purchase A/c Dr 1000

To Ikali A/c 1000

( Being Goods purchased on Credit )

Purchase account is debited as it is an expense and Ikali Account is credited as she is giver.

August 5. Ikali A/c Dr 1000

To Bills Payable A/c 1000

( Being bill Accepted )

Ikali Account is debited as he is the reciever and Bills payable is credited as it is the liability of John

February 5. Bills Payable A/c Dr 1000

To Cash A/c 1000

( Being bills Paid )

Bills payable is debited as the liability decreases and cash is credited as it is gone out ( Paid )

Thank you....