Question

On Feb. 02, 2017, Verma purchased from Sharma goods for ₹ 17,500. Verma paid ₹ 2,500 immediately and for the balance gave a promissory note to Sharma payable after 60 days. Sharma immediately endorsed the promissory note in favour of his creditor.
Gupta for the full settlement of a debt of ₹ 15,400. On the due date of the bill Gupta presented the bill to Verma which the latter dishonoured and Gupta paid ₹ 5,000 noting charges. On the same date Gupta informed Sharma about the dishonour of the bill. Sharma settled his debt to Gupta by cheque for ₹ 15,500 which includes noting charges and interest. Verma settled Sharma.s claim by cheque for the same amount.
Record the necessary journal entries is the books of Sharma, Gupta and Verma for the above transaction and prepare Verma.s and Gupta.s accounts in the books of Sharma. Sharma.s account in the books of Verma. And also Sharma's account in the books of Gupta.

Answer 1

Books of Sharma Journal
Date	Particulars	L.F.	Debit Amount ₹	Credit Amount  ₹
2017
Feb.02	Verma Dr.		17,500
	To Sales A/c			17,500
	(Goods sold to Verma)
Feb.02	Cash A/c Dr.		2,500
	Bills Receivable A/c Dr.		15,000
	To Verma			17,500
	(Cash ₹ 2,500 and Promissory Note ₹ 15,000 received from Verma for 60 days)
Feb.02	Gupta A/c Dr.		15,400
	To Bills Receivable A/c			15,000
	To Discount Received A/c			400
	(Promissory Note endorsed to Gupta in full settlement of amount due to him)
Apr.05	Discount Received A/c Dr.		400
	Verma Dr.		15,050
	To Gupta			15,450
	(Promissory Note issued by Verma dishonoured and Gupta paid ₹ 50 as noting charges) Note: In this question ₹ 5,000 is given as noting charges, there is mistake. Here ₹ 50 has been taken as noting charges instead of ₹ 5,000).
Apr.06	Interest A/c Dr.		50
	To Gupta			50
	(Interest of ₹ 50 debited to Gupta, on account of dishonour of Promissory Note)
Apr.06	Gupta Dr.		15,500
	To Bank A/c			15,500
	(Gupta's A/c settled)
Apr.06	Bank A/c Dr.		15,050
	To Verma			15,050
	(Cheque received from Verma for the amount due from him)

 

Dr.	Ledger Verma's Account						Cr.
Date	Particulars	J.F.	Amount ₹	Date	Particulars	J.F.	Amount ₹
2017				2017
Feb.02	Sales		17,500	Feb.02	Cash		2,500
Apr.06	Gupta		15,050	Feb.02	Bills Receivable		15,000
				Apr.06	Bank		15,050
			32,550				32,550

 

Dr.	Gupta's Account						Cr.
Date	Particulars	J.F.	Amount ₹	Date	Particulars	J.F.	Amount ₹
2017				2017
Feb.02	B/R		15,000	Apr.01	Balance b/d		15,400
Feb.02	Discount Received		400	Apr.06	Verma		15,050
Feb.02	Bank		15,500	Apr.06	Discount Reserved		400
				Apr.06	Interest		50
			30,900				30,900

 

Books of Verma Journal
Date	Particulars	L.F.	Debit Amount ₹	Credit Amount ₹
2017
Feb.02	Purchases A/c Dr.		17,500
	To Sharma			17,500
	(Goods bought from Sharma)
Feb.02	Sharma Dr.		17,500
	To Bills Payable A/c			15,000
	To Cash A/c			2,500
	(Cash ₹ 2,500 paid and Promissory Note made for the balance)
Apr.06	Bills Payable A/c Dr.		15,000
	Noting Charges A/c Dr.		50
	To Sharma			15,050
	(Promissory Note dishonoured on maturity)
Apr.06	Sharma Dr.		15,050
	To Bank A/c			15,050
	(Payment made to Sharma through cheque)

 

Dr.	Ledger Sharma's Account						Cr.
Date	Particulars	J.F.	Amount ₹	Date	Particulars	J.F.	Amount ₹
2017				2017
Feb.02	Cash		2,500	Feb.02	Purchases		17,500
Feb.02	Bills Payable		15,000	Apr.06	Bills Payable		15,000
Apr.06	Bank		50	Apr.06	Noting Charges		50
			30,900				30,900

 

Books of Gupta Journal
Date	Particulars	L.F.	Debit Amount ₹	Credit Amount ₹
2017
Feb.02	Bills Receivable A/c Dr.		15,000
	Discount Allowed A/c Dr.		400	15,400
	To Sharma
	(Promissory Note ₹ 15,000 received  from Sharma in full settlement for 60 days)
Apr.06	Sharma Dr.		15,450
	To Bills Receivable A/c			15,000
	To Discount Allowed A/c			400
	To Bank A/c			50
	(Promissory Note received from Sharma, dishonoured)
Apr.06	Sharma Dr.		50
	To Interest A/c			50
	(Interest ₹ 50 credited on account of Promissory Note dishonoured)
Apr.06	Bank A/c Dr.		15,500
	To Sharma			15,500
	(Cheque received from Sharma)

 

Dr.	Ledger Sharma's Account						Cr.
Date	Particulars	J.F.	Amount ₹	Date	Particulars	J.F.	Amount ₹
2017				2017
Feb.01	Balance b/d		15,400	Feb.02	Bills Receivable		15,000
Apr.06	Bills Receivable		15,000	Feb.02	Discount Allowed		400
Apr.06	Discount Allowed		4,000	Apr.06	Bank		15,500
Apr.06	Bank		50
Apr.06	Interest		50
			30,900				30,900