Question

On Feb. 14, 2017 Rashmi sold good ₹ 7,500 to Alka. Alka paid ₹ 500 in cash and for the bank balance accepted a bill of exchange drawn upon her by Rashmi payable after two months. On Apr.10, 2017 Alka approached Rashmi to cancel the bill since she was short of funds. She further requested Rashmi to accept ₹ 2,000 in cash and draw a new bill for the balance including interest ₹ 500. Rashmi accepted Alka’s request and drew a new bill for the amount due payable after 2 months. The bill was accepted by Alka. The new bill was duly met by Alka on maturity.
Record the necessary journal entries in the books of Rashmi and Alka and prepared Alka’s account in the books of Rashmi’s and Rashmi’s account in the books of Alka’s.

Answer 1

Books of Rashmi Journal
Date	Particulars	L.F.	Debit Amount ₹	Credit Amount ₹
2017
Feb.14	Alka Dr.		7,500
	To Sales A/c			7,500
	(Goods sold to Alka)
Feb.14	Cash A/c Dr.		500
	Bills Receivable A/c Dr.		7,000
	To Alka			7,500
	(Cash received ₹ 500 and the bill accepted by Alka)
Apr.10	Alka Dr.		7,000
	To Bills Receivable A/c			7,000
	(Alka got the bill cancelled)
Apr.10	Cash A/c Dr.		2,000
	To Alka			2,000
	(Received cash from Alka)
Apr.10	Alka Dr.		500
	To Interest A/c			500
	(Interest charged on the amount due from Alka)
Apr.10	Bills Receivable A/c Dr.		5,500
	To Alka			5,500
	(Alka's acceptance payable of two months received)
June.13	Cash A/c Dr.		5,500
	To Bills Receivable A/c			5,500
	(Alka's acceptance met on due date)

 

Dr.	Ledger  Alka's Account						Cr.
Date	Particulars	J.F.	Amount ₹	Date	Particulars	J.F.	Amount ₹
2017				2017
Feb.14	Sales		7,500	Feb.14	Cash		500
Apr.10	Bills Receivable		7,000	Feb.14	Bills Receivable		7,000
Apr.10	Interest		500	Apr.10	Cash		2,000
				Apr.10	Bills Receivable		5,500
			15,000				15,000

 

Books of Alka Journal
Date	Particulars	L.F.	Debit Amount ₹	Credit Amount ₹
2017
Feb.14	Purchases A/c Dr.		7,500
	To Rashmi			7,500
	(Goods bought from Rashmi)
Feb.14	Rashmi Dr.		7,500
	To Cash A/c			500
	To Bills Payable A/c			7,000
	(Cash paid to Rashmi ₹ 500 and a bill for ₹ 7,000 drawn by Rashmi accepted)
Apr.10	Bills Payable A/c Dr.		7,000
	To Rashmi			7,000
	(Bill cancelled before maturity)
Apr.10	Rashmi Dr.		2,000
	To Cash A/c			2,000
	(Cash paid to Rashmi)
Apr.10	Interest A/c Dr.		500
	To Rashmi			500
	(Interest due to Rashmi)
Apr.10	Rashmi Dr.		5,500
	To Bills Payable A/c			5,500
	(Rashmi's acceptance payable after two months accepted)
June.13	Bills Payable A/c Dr.		5,500
	To Cash A/c			5,500
	(The bill met on due date)

 

Dr.	Ledger Rashmi’s Account						Cr.
Date	Particulars	J.F.	Amount ₹	Date	Particulars	J.F.	Amount ₹
2017				2017
Feb.14	Cash		500	Feb.14	Purchases		7,500
Feb.14	Bills Payable		7,000	Apr.10	Bills Payable		7,000
Apr.10	Cash		2,000	Apr.10	Interest		500
Apr.10	Bills Payable		5,500
			15,000				15,000