Question

Narayanan purchased goods for ₹ 25,000 from Ravinderan on Feb. 01, 2016. Ravinderan drew upon Narayanan a bill of exchange for the same amount payable after 30 days. On the due date Narayanan dishonoured his acceptance.
Record the necessary journal entries in the books of Ravinderan and Narayanan in following cases:
• When the bill was retained by Ravinderan with him till the date of its maturity.
• When the bill was discounted by Ravinderan immediately with his bank @ 6% p.a.
• When the bill was endorsed to his creditor Ganeshan.
• When the bill was sent by Ravinderan to his bank for collection a few days before it maturity.

Answer 1

Case (i): When the bill was retained by Ravinderan with him till the date of its maturity

Books of Ravindran Journal
Date	Particulars	L.F.	Debit Amount ₹	Credit Amount ₹
2016
Feb.01	Narayanan Dr.		25,000
	To Sales A/c			25,000
	(Goods sold to Narayanan)
Feb.01	Bills Receivable A/c Dr.		25,000
	To Narayanan			25,000
	(Narayanan's acceptance  received for 30 days)
Mar.05	Narayanan Dr.		25,000
	To Bills Receivable A/c			25,000
	(Narayanan failed to meet his acceptance and bill dishonoured)

 

Books of Narayanan Journal
Date	Particulars	L.F.	Debit Amount ₹	Credit Amount ₹
2016
Feb.01	Purchases A/c Dr.		25,000
	To Ravinderan			25,000
	(Goods bought from Ravinderan)
Feb.01	Ravinderan Dr.		25,000
	To Bills Payable A/c			25,000
	(Ravinderan's bill accepted)
Mar.05	Bills Payable A/c Dr.		25,000
	To Ravinderan A/c			25,000
	(Bill dishonoured on maturity)

Case (ii): When the bill was discounted by Ravinderan immediately with his bank @ 6% p.a.

Books of Ravinderan Journal
Date	Particulars	L.F.	Debit Amount ₹	Credit Amount ₹
2016
Feb.01	Narayanan Dr.		25,000
	To Sales A/c			25,000
	(Goods sold to Narayanan)
Feb.01	Bills Receivable A/c Dr.		25,000
	To Narayanan			25,000
	(Narayanan's acceptance received)
Feb.01	Bank A/c Dr.		24,875
	Discount A/c Dr.		125
	To Bills Receivable A/c			25,000
	(Narayanan's acceptance got discounted with bank @ 6% p.a.)
Mar.05	Narayanan		25,000
	To Bank A/c			25,000
	(Narayanan's acceptance dishonoured)

 

Books of Narayanan Journal
Date	Particulars	L.F.	Debit Amount ₹	Credit Amount ₹
2016
Feb.01	Purchases A/c Dr.		25,000
	To Ravinderan			25,000
	(Goods bought from Raivnderan)
Feb.01	Ravinderan Dr.		25,000
	To Bills Payable A/c			25,000
	(Ravinderan's bill accepted)
Mar.05	Bills Payable A/c Dr.		25,000
	To Ravinderan			25,000
	(Bill dishonoured on maturity)

Case (iii): When the bill was endorsed to his creditor Ganeshan

Books of Ravinderan Journal
Date	Particulars	L.F.	Debit Amount ₹	Credit Amount ₹
2016
Feb.01	Narayanan Dr.		25,000
	To Sales A/c			25,000
	(Goods sold to Narayanan)
Feb.01	Bills Receivable A/c Dr.		25,000
	To Narayanan			25,000
	(Narayanan's acceptance received)
Feb.01	Ganeshan Dr.		25,000
	To Bills Receivable A/c			25,000
	(Narayanan's acceptance endorsed in favour of Ganeshan)
Mar.05	Narayanan Dr.
	To Ganeshan A/c			25,000
	(Narayanan's acceptance dishonoured)

 

Books of Narayanan Journal
Date	Particulars	L.F.	Debit Amount ₹	Credit Amount ₹
2016
Feb.01	Purchases A/c Dr.		25,000
	To Ravinderan			25,000
	(Goods bought from Ravinderan)
Feb.01	Ravinderan Dr.		25,000
	To Bills Payable A/c			25,000
	(Ravinderan's bill accepted)
Mar.05	Bills Payable A/c Dr.		25,000
	To Ravinderan			25,000
	(Ravinderan's bill dishonoured on due date)

Case (iv): When the bill was sent by Ravinderan to his bank for collection a few days before it maturity

Books of Ravinderan Journal
Date	Particulars	L.F.	Debit Amount ₹	Credit Amount ₹
2016
Feb.01	Narayanan Dr.		25,000
	To Sales A/c			25,000
	(Goods sold to Narayanan)
Feb.01	Bills Receivable A/c Dr.		25,000
	To Narayanan			25,000
	(Narayanan's acceptance received)
Feb.01	Bill Sent for Collection A/c Dr.		25,000
	To Bills Receivable A/c			25,000
	(Bill sent to bank for collection)
Mar.05	Narayanan Dr.		25,000
	To Bill Sent for Collection A/c			25,000
	(Bill got dishonoured)

 

Books of Narayanan Journal
Date	Particulars	L.F.	Debit Amount ₹	Credit Amount ₹
2016
Feb.01	Purchases A/c Dr.		25,000
	To Ravinderan			25,000
	(Bought goods from Ravinderan)
Feb.01	Ravinderan Dr.		25,000
	To Bills Payable A/c			25,000
	(Ravinderan's bill accepted)
Mar.05	Bills Payable A/c Dr.		25,000
	To Ravinderan			25,000
	(Ravinderan's bill dishonoured)