Question

On Jan 01, 2017 Vibha sold goods worth ₹ 18,000 to Sudha and drew upon the latter a bill of exchange for the same amount payable after two months. Sudha accepted Vibha’s draft and returned the same to Vibha after acceptance. Vibha endorsed the bill immediately in favour of her creditor Geeta. Five days before the maturity of the bill Sudha requested Vibha to cancel the bill since she was short of funds. She further requested to draw a new bill upon her including interest of ₹ 200. Vibha accepted Sudha’s request. Vibha took the bill from Geeta by making the payment to her in cash and cancelled the same. Then she drew a new bill upon Sudha as agreed. The new bill was payable after one month. The new bill was duly met by Sudha on maturity. Record the necessary journal entries in the books of Vibha.

Answer 1

Books of Vibha Journal
Date	Particulars	L.F.	Debit Amount ₹	Credit Amount ₹
2017
Jan.01	Sudha Dr.		18,000
	To Sales A/c			18,000
	(Goods sold to Sudha)
Jan.01	Bills Receivable A/c Dr.		18,000
	To Sudha			18,000
	(Sudha's acceptance received)
Jan.01	Geeta Dr.		18,000
	To Bills Receivable A/c			18,000
	(Sudha's acceptance endorsed in favour of Geeta)
Feb.27	Sudha Dr.		18,000
	To Geeta			18,000
	(Sudha cancelled the bill five days before the maturity)
Feb.27	Geeta Dr.		18,000
	To Cash A/c			18,000
	(Cash paid to Geeta)
Feb.27	Sudha		200
	To Interest A/c			200
	(Interest credited to Sudha on account of cancelling the bill)
Feb.27	Bills Receivable A/c Dr.		18,200
	To Sudha			18,200
	(New bill received from Sudha)
Mar.02	Cash A/c Dr.		18,200
	To Sudha			18,200
	(Shudha's acceptance met on due date)