Question

Bansal Traders allow a trade discount of 10% on the list price of the goods purchased from them. Mohan traders, who runs a retail shop made the following purchases from Bansal Traders

Date	Amount (₹)
Dec.21, 2016	1,000
Dec.26, 2016	1,200
Dec.18, 2016	2,000
Dec.31, 2016	5,000

For all the purchases Mohan Traders drew promissory note in favour of Bansal Traders payable after 30 days. The promissory note for the sale of Dec. 21, 2016 was retained by Bansal Traders with them till the date of its maturity. The promissory note drawn on 26.12.2016 was discounted by Bansal Traders from their bank at 12% p.a. The promissory note drawn on Dec. 28, 2016 was endorsed by Bansal Traders in favour of their creditor Dream Soaps in full settlement of a purchase amounting to ₹ 1,900. On 25.1.2017 Bansal Traders sent the promissory note drawn on Dec. 31, 2016 to their bank for collection. All the promissory notes were met by Mohan Traders. Record the necessary journal entries for the above transactions in the books of Bansal Traders and Mohan Traders and prepare Mohan Traders account in the books of Bansal Traders and Bansal Traders account in the books of Mohan Traders.

Answer 1

Journal Entries in the Books of Bansal Traders
Date	Particulars	L.F.	Debit Amount ₹	Credit Amount ₹
2016
Dec.21	Mohan Traders Dr.		900
	To Sales A/c			900
	(Goods sold to Mohan Traders list price ₹ 1,000 at 10% trade discount)
2016
Dec.21	Bills Receivable A/c Dr.		900
	To Mohan Traders			900
	(Promissory note received from Mohan Traders payable after 30 days)
2016
Dec.26	Mohan Traders Dr.		1,080
	To Sales A/c			1,080
	(Goods sold to Mohan Traders list price ₹ 1,200 at 10% trade discount)
2016
Dec.26	Bills Receivable A/c Dr.		1,080
	To Mohan Traders			1,080
	(Promissory note received from Mohan Traders)
2016
Dec.26	Bank A/c Dr.		1,071
	Discount A/c Dr.		9
	To Bills Receivable A/c			1,080
	(Promissory note discounted from the Bank)
2016
Dec.28	Mohan Traders A/c Dr.		1,800
	To Sales A/c			1,800
	(Goods sold to Mohan Traders list price ₹ 2,000 at 10% trade discount)
2016
Dec.28	Bills Receivable A/c Dr.		1,800
	To Mohan Traders A/c			1,800
	(Promissory note received from Mohan Traders)
2016
Dec.28	Dream Soaps A/c Dr.		1,900
	To Bills Receivable A/c			1,800
	To Discount Received A/c			100
	(Promissory note of ₹ 1,800 sent to Dream Soap in full settlement of amount due to him)
2016
Dec.31	Mohan Traders Dr.		4,500
	To Sales A/c			4,500
	(Goods sold to Mohan trades list price ₹ 5,000 at 10% trade discount)
2016
Dec.31	Bills Receivable A/c Dr.		4,500
	To Mohan Traders			4,500
	(Promissory note received from Mohan Traders for 30 days)
2017
Jan.23	Cash A/c Dr.		900
	To Bills Receivable A/c			900
	(Promissory note issued on Dec. 21, 2005 was met on maturity)
2017
Jan.25	Bill Sent for collection A/c Dr.		4,500
	To Bills Receivable A/c			4,500
	(Promissory note issued on Dec. 31, 2005 sent for collection to bank)
2017
Feb.02	Bank A/c Dr.		4,500
	To Bill Sent for Collection A/c			4,500
	(Bank got payment of bill sent for collection on due date)

 

Dr.	In the books of Bansal Traders Mohan Trader's Account						Cr.
Date	Particulars	J.F.	Amount ₹	Date	Particulars	J.F.	Amount ₹
2016				2016
Dec.21	Sales		900	Dec.21	Bills Receivable		900
Dec.26	Sales		1,080	Dec.26	Bills Receivable		1,080
Dec.28	Sales		1,800	Dec.28	Bills Receivable		1,800
Dec.31	Sales		4,500	Dec.31	Bills Receivable		4,500
			8,280				8,280

 

Journal Entries in the Books of Mohan Trader’s
Date	Particulars	L.F.	Debit Amount ₹	Credit Amount ₹
2016
Dec.21	Purchases A/c Dr.		900
	To Bansal Traders			900
	(Goods bought from Bansal Trader's list price ₹ 1,000 at 10% trade discount)
2016
Dec.21	Bansal Trader Dr.		900
	To Bills Payable A/c			900
	(Promissory note issued Bansal Traders for ₹ 900)
2016
Dec.26			1,080	1,080
	Purchases A/c Dr.
	To Bansal Traders
	(Goods bought from Bansal Traders list price ₹ 1,200 at 10% Trade discount)
2016
Dec.26	Bansal Traders Dr.		1,080
	To Bills Payable A/c			1,080
	(Promissory note received from Bansal Traders)
2016
Dec.28	Purchases A/c Dr.		1,800
	To Bansal Traders			1,800
	(Goods bought from Bansal Traders list price ₹ 2,000 at 10% trade discount)
2016
Dec.28	Bansal Traders Dr.		1,800
	To Bills Payable A/c			1,800
	(Promissory note issued to Bansal Traders)
2016
Dec.31	Purchases A/c Dr.		4,500
	To Bansal Traders			4,500
	(Goods bought from Bansal Traders of list price ₹ at 10% trade
2016
Dec.31	Bansal Traders Dr.		4,500
	To Bills Payable A/c			4,500
	(Promissory note issued to Bansal Traders)
2017
Jan.23	Bills Payable A/c Dr.		900
	To Cash A/c			900
	(The first promissory note discharged on its due date)
2017
Jan.28	Bills Payable A/c Dr.		1,080
	To Bank A/c			1,080
	(The second promissory note discharged on ₹ due date)
2017
Jan.30	Bills Payable A/c Dr.		1,800
	To Cash A/c			1,800
	(The third promissory discharged by paying ₹ 1,800 to Dream Soaps)
2017
Feb.02	Bills Payable A/c Dr.		4,500	4,500
	To Bank A/c
	(The fourth promissory note discharged by paid ₹ 4,500 to Bank)

 

Dr.	In the books of Mohan Traders BansalTrader's Account						Cr.
Date	Particulars	J.F.	Amount ₹	Date	Particulars	J.F.	Amount ₹
2016				2016
Dec.21	Bills Payable		900	Dec.21	Purchases		900
Dec.26	Bills Payable		1,080	Dec.26	Purchases		1,080
Dec.28	Bills Payable		1,800	Dec.28	Purchases		1,800
Dec.31	Bills Payable		4,500	Dec.31	Purchases		4,500
			8,280				8,280