Question

On Jan. 01, 2016 Arun sold goods for ₹ 30,000 to Sunil. 50% of the payment was made immediately by Sunil on which Arun allowed a cash discount of 2%. For the balance Sunil drew a promissory note in favour of Arun payable after 20 days. Since, the date of maturity of bill was a public holiday; Arun presented the bill on a day, as per the provisions of Negotiable Instrument Act which was met by Sunil. State the date on which the bill was presented by Arun for payment and jounalise the above transactions in the books of Arun and Sunil.

Answer 1

Journal Entries in the Books of Arun
Date	Particulars	L.F.	Debit Amount ₹	Credit Amount ₹
2016
Jan.01	Sunil Dr.		30,000
	To Sales A/c			30,000
	(Goods sold to Sunil)
Jan.01	Cash A/c Dr.		14,700
	Discount Allowed A/c Dr.		300
	To Sunil			15,000
	(Half of the amount due from Sunil was received and allowed him 2% Cash Discount)
Jan.01	Bills Receivable A/c Dr.		15,000
	To SunilTo Sunil			15,000
	(Promissory note received for 20 days from Sunil for balance amount due from Sunil)
Jan.23	Cash A/c Dr.		15,000
	To Bills Receivable A/c			15,000
	(Cash received from Sunil for B/R one day before maturity, as per negotiable instrument act, if the date of maturity is holiday, negotiable instrument will be met one day before maturity)

Note:

Date of maturity of the promissory note is Jan. 24, 2016, on account of holiday, it will be presented one day earlier that is on Jan. 23, 2016.

 

Journal Entries in the Book of Sunil
Date	Particulars	L.F.	Debit Amount ₹	Credit Amount ₹
2016
Jan.01	Purchases A/c Dr.		30,000
	To Arun			30,000
	(Goods purchased from Arun)
Jan.01	Arun Dr.		15,000
	To Cash A/c			14,700
	To Discount Received A/c			300
	(Half amount due to Arun paid by cheque and 2% discount allowed by him)
Jan.01	Arun Dr.  A/c		15,000
	To Bills Payable			15,000
	(Promissory note issued in favour of Arun for twenty days)
Jan.23	Bills Payable A/c Dr.		15,000
	To Cash A/c			15,000
	(Promissory note met one day before the maturity day)