Question

On Jan 01, 2016, Shankar purchased goods from Parvati for ₹ 8,000 and immediately drew a promissory note in favour of Parvati payable after 3 months. On the date of maturity of the promissory note, the Government of India declared holiday under the Negotiable Instrument Act 1881. Since, Parvati was unaware about the provision of the law regarding the date of maturity of the bill, she handed over the bill to her lawyer, who duly presented the bill and received the payment. The amount of the bill was handed over by the lawyer to Parvati immediately. Record the necessary Journal entries in the books of Parvati and Shankar.

Answer 1

Books of Parvati Journal
Date	Particulars	L.F.	Debit Amount ₹	Credit Amount ₹
2016
Jan.01	Shankar Dr.		8,000
	To Sales A/c			8,000
	(Goods sold to Shankar)
Jan.01	Bills Receivable A/c Dr.		8,000
	To Shankar			8,000
	(Promissory Note received from Shankar for three months)
Apr.05	Cash A/c Dr.		8,000
	To Bills Receivable A/c			8,000
	(Cash received for Promissory Note one day after the maturity date on account of holiday declared by Govt.)

 

Books of Shankar Journal
Date	Particulars	L.F.	Debit Amount ₹	Credit Amount ₹
2016
Jan.01	Purchases A/c Dr.		8,000
	To Parvati			8,000
	(Goods purchased from Parvati)
Jan.01	Parvati Dr.		8,000
	To Bills Payable A/c			8,000
	(Promissory note for three months sent to Parvati)
Apr.05	Bills Payable A/c Dr.		8,000
	To Cash A/c			8,000
	(Cash paid on maturity of promissory note)

Note:

Here, it has been assumed holiday on Apr.04, 2016 is emergency holiday if it had gazetted holiday, the Promissory Note should have been discharged on Apr.05, 2011.