Question

Ravi sold goods for ₹ 40,000 to Sudershan on Feb 13, 2016. He drew four bills of exchange upon Sudershan. The first bill was for ₹ 5,000 payable after one month. The second bill was for ₹ 10,000 payable after 40 days; the third bill was for ₹ 12,000 payable after three months and fourth bill was for the balance amount payable after 19 days. Sudershan accepted all the bills and returned the same to Ravi. Ravi discounted the first bill with his bank at 6% p.a. He endorsed the second bill to his creditor Mustaq for the full settlement of a debt of Rs 10,200. The third bill was kept by Ravi with him till the date of maturity. Five days before the maturity of the fourth bill, Ravi sent the bill to his bank for collection. All the four bills were dishonored by Sudarshan on maturity. Sudershan settled Ravi’s claim in cash three days after the dishonour of each bill along with interest @ 12% p.a. for the terms of the bills. You are requested to record the necessary journal entries in the books to Ravi, Sudershan, Mustaq and bank for the above transaction. Also prepare Sudershan’s account and Mustaq’s account in the books of Ravi.

Answer 1

Books of Ravi Journal
Date	Particulars	L.F.	Debit Amount ₹	Credit Amount ₹
2016
Feb.13	Sudershan  Dr.		40,000
	To Sales A/c			40,000
	(Goods sold to Sudershan)
Feb.13	Bills Receivable A/c  Dr.		40,000
	To Sudershan			40,000
	(Four bills from Sudershan received: the first for ₹ 5,000, the second bill for ₹ 10,000, the third bill for ₹ 12,000 and the fourth bill for ₹ 13)
Feb.13	Bank A/c  Dr.		4,975
	Discount A/c  dr.		25
	To Bills Receivable A/c			5,000
	(The first bill discounted with bank at 6% p.a.)
Feb.13	Mustaq   Dr,		10,200
	To Bills Receivable A/c			10,000
	To Discount Received A/c			200
	(The second bill endorsed to Mustaq in full settlement of amount due to him)
Mar.03	Bill Sent for Collection A/c  Dr.		13,000
	To Bills Receivable A/c			13,000
	(The fourth bill sent to bank for collection)
Mar.07	Sudershan  Dr.		81
	To Interest A/c			81
	(Interest due on the fourth bill ₹ 13,000 for 19 days at 12% p.a,)
Mar.10	Cash A/c   Dr.		13,081
	To Sudershan			13,081
	(Cash received from Sudershan)
Mar.16	Sudershan  Dr.		5,000
	To Bank A/c			5,000
	(The first bill dishonoured)
Mar.16	Sudershan  Dr.		50
	To Interest A/c			50
	(Interest due on amount Rs 5,000 at 12% for one month)
Mar.19	Cash A/c  Dr.		5,050
	To Sudershan A/c			5,050
	(Sudershan paid the amount due on account dishonoured of the first bill plus interest)
Mar.28	Sudershan  Dr.		10,000
	Discount Received A/c  Dr.		200
	To Mustaq			10,200
	(The second bill dishonoured, which had endorsed in favour of Mustaq)
Mar.28	Sudershan  Dr.		132
	To Interest A/c			132
	(Interest charged at 12% on the amount due on account of dishonour of the second bill ₹ 10,000)
Apr.01	Cash A/c  Dr.		10,132
	To Sudershan A/c			10,132
	(Received cash from Sudershan for the second bill along with interest)
May.16	Sudershan  Dr.		12,000
	To Bills Receivable A/c			12,000
	(The third bill dishonoured on due date)
May.16	Sudershan  Dr.
	To Interest A/c
	(Interest at 12% for 3 months charged on the amount due on account of dishonour the third bill ₹ 12,000)
May.19	Cash A/c  Dr.		12,360
	To Sudershan			12,360
	(Cash received from Sudershan for the third bill along with interest 12% p.a.)

 

Dr.	Ledger Sundershan'sAccount						Cr.
Date	Particulars	J.F.	Amount ₹	Date	Particulars	J.F.	Amount ₹
2016				2016
Feb.13	Sales		40,000	Feb.13	Bills Receivable		40,000
Mar.07	Bill sent for Collection		13,000	Mar.10	Cash		13,081
Mar.07	Interest		81	Mar.19	Cash		5,050
Mar.16	Bank		5,000	Apr.01	Cash		10,132
Mar.16	Interest		50	May.19	Cash		12,360
Mar.28	Mustaq		10,000
Mar.28	Interest		132
May.16	Bills Receivable		12,000
May.16	Interest		360
			80,623				80,623

 

Dr.	Mustaq's Account						Cr.
Date	Particulars	J.F.	Amount  ₹	Date	Particulars	J.F.	Amount  ₹
2016				2016
Feb.13	B/R		10,000	Mar.28	Sudershan		10,000
Feb.13	Discount Received		200	Mar.28	Discount Received		200
			10,200				10,200

 

Books of Sudershan Journal
Date	Particulars	L.F.	Debit Amount ₹	Credit Amount ₹
2016
Feb.13	Purchases A/c Dr.		40,000
	To Ravi			40,000
	(Goods bought from Ravi)
Feb.13	Ravi Dr.		40,000
	To Bills Payable A/c			40,000
	(Four bills drawn by Ravi accepted: the first bill for ₹ 5,000 payable after one month, the second for ₹ 10,000 payable after 40 days, the third for ₹ 12,000 payable after 3 months and the fourth for ₹ 13,000 payable after 19 days)
Mar.07	Bills Payable A/c Dr.		13,000
	To Ravi			13,000
	(The fourth bill dishonoured)
Mar.07	Interest A/c Dr.		81
	To Ravi			81
	(Interest charged for the amount of fourth bill at 12% p.a.)
Mar.10	Ravi Dr.		13,081
	To Cash A/c			13,081
	(Cash paid to Ravi for amount due on account of dishounor of the fourth bill along with interest at 12% p.a. for 19 days)
Mar.16	Bills Payable A/c Dr.		5,000
	To Ravi			5,000
	(The first bill dishonoured)
Mar.16	Interest A/c Dr.		50
	To Ravi			50
	(Interest charged at 12% p.a. on the first bill for one month)
Mar.19	Ravi Dr.		5,050
	To Cash A/c			5,050
	(Cash paid to Ravi for amount due on account of dishounor of the first bill along with interest at 12% p.a. for one month)
Mar.28	Bills Payable A/c Dr.		10,000
	To Ravi			10,000
	(The second bill dishonoured)
Mar.28	Interest A/c Dr.		132
	To Ravi			132
	(Interest charged at 12% p.a. for 40 days on the second bill)
Apr.01	Ravi Dr.		10,132
	To Cash A/c			10,132
	(Cash paid to Ravi for amount due on account of dishounor of the second bill along with interest at 12% p.a. for 40 days)
May.16	Bills Payable A/c Dr.		12,000
	To Ravi			12,000
	(The third bill dishonoured)
Mar.16	Interest A/c Dr.		360
	To Ravi			360
	(Interest charged at 12% p.a. for 3 months on third bill)
May.19	Ravi Dr.		12,360
	To Cash A/c			12,360
	(Cash paid to Ravi for amount due on account of dishounor of the third bill along with interest at 12% p.a. for 3 months)

 

Books of Mustaq Journal
Date	Particulars	L.F	Debit Amount ₹	Credit Amount ₹
2016
Feb.13	Bills Receivable A/c Dr.		10,000
	Discount Allowed A/c Dr.		200
	To Ravi			10,200
	(Bills Receivable received from Ravi and allowed discount)
Mar.28	Ravi Dr.		10,200
	To Bills Receivable A/c			10,000
	To Discount Received (Bill dishonoured)			200

 

Books of Bank Journal
Date	Particulars	L.F	Debit Amount ₹	Credit Amount ₹
2016
Mar.03	Bills Receivable A/c Dr.		13,000
	To Bills for Collection A/c			13,000
	(Bill received from Ravi for collection)
Mar.07	Bills for Collection A/c Dr.		13,000
	To Bills Receivable A/c			13,000
	(Bill dishonoured)