On 5th September, 2010 Prakash Patil accepted a bill of Rs 16,000 drawn by Chandu Chaudhari for 3 months. This bill was drawn for amount which Prakash Patil owed to Chandu Chaudhari. On same date Chandu Chaudhari purchased goods from Magan Mahajan for Rs 20,000 for this Chandu Chaudhari endorsed Prakash Patil’s acceptance in favour of Magan Mahajan and accepted 2 months bill for the balance due. On 5th October, 2010 Magan Mahajan discounted both the bill with his bank @ 12% p.a.
On the due date Prakash Patil’s honoured his acceptance while Chandu Chaudhari unable to meet the payment for his acceptance. Magan Mahajan’s bank paid noting charges Rs 100.
Pass Journal entries in the books of Magan Mahajan and also prepare Prakash Patil’s and Magan Mahajan ledger account in the books of Chandu Chaudhari.
Solution
Books Of Magan Mahajan
Journal Entry
| Date | Particulars | L.F. | Debit Amount Rs. | Credit Amount Rs. |
| 2010 Sept.05 |
Chandu Chaudhari Dr. To Sales A/c (Goods Sold to Chandu Chaudhari) |
20,000 | 20,000 | |
| Sept.05 | Bill Receivable A/c Dr. Bills Receivable A/c Dr. To Chandu Chaudhari (Bill drawn and accepted) |
16,000 4,000 |
20,000 | |
| Oct.05 | Bank A/c Dr. Discount A/c Dr. To Bills Receivable A/c (Bill discounted with the bank @ 12% per annum before 2 months) |
15,680 320 |
16,000 | |
| Oct.05 | Bank A/c Dr. Discount A/c Dr. To Bill Receivable A/c |
3,960 40 |
4,000 | |
| Nov.08 | Chandu Chaudhari A/c Dr. To Bank A/c (Discounted bill dishonoured on maturity date, noting charges of Rs.100 Paid) |
4,100 | 4,100 |
In the books Of Chandu Chaudhari
Prakash Patil's Account
Dr. Cr.
| Date | Particulars | J.F. | Amount (Rs.) |
Date | Particulars | J.F. | Amount (Rs.) |
| 2011 Sept.05 |
Balance b/d | 16,000 | 2011 Sept.05 |
Bills Receivable A/c | 16,000 | ||
| 16,000 | 16,000 |
Magan Mahajan's Account
Dr. Cr.
| Date | Particulars | J.F. | Amount (Rs.) | Date | Particulars | J.F. | Amount(Rs.) |
| 20111 Sept.05 |
Bills Receivable A/c | 16,000 | 2011 Sept.05 |
Purchases A/c | 20,000 | ||
| Sept.05 | Bills Payable A/c | 4,000 | Nov.08 | Bills Payable A/c | 4,100 | ||
| Nov.08 | Balance c/d | 4,100 | |||||
| 24,100 | 24,100 |
