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Write Journal of Narayan and Chunilal for the Above Bill Transactions. - Book Keeping and Accountancy

Journal Entry

On 1st June, 2010 Narayan draws a bill for Rs 50,000 on Chunilal for 4 months period.
The bill is duly accepted and returned to Narayan. One month after the date. Narayan discounted the bill with bank @ 18% p.a.
 
Before due date Chunilal dishonoured his acceptance. Bank paid noting charges Rs 1,125.  Narayan requested to renew the bill for further period of 2 months. Narayan agreed he took the bill back from bank and received new acceptance for 40% amount of the bill with full amount of noting charges and cheque for 60% balance plus interest @ 12% p.a.

Before the due date Chunilal declared insolvent and 30% of the amount due could be recovered from his private estate.
 Write Journal of Narayan and Chunilal for the above bill transactions.

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Solution

Books Of Narayan
Journal Entry

Date Particulars L.F.

Debit Amount (Rs.)

Credit Amount (Rs.)
2010
Jun.01
Bills Receivable A/c                  Dr
    To Chunilal A/c
(Bill drawn and accepted)
  50,000 50,000
Jul.01 Bank A/c                                  Dr.
Discount charges A/c              Dr.
    To Bills Receivable A/c
(Bill discounted with Bank @ 185 per annum before 3 months)
  47,750
2,250
50,000
Oct.04

Chunilal A/c                           Dr.
   To Bank A/c 
(Discounted bill cancelled and noting charges of Rs 1,125 paid)

  51,125 51,125
Oct.04 Chunilal A/c                         Dr.
    To Interest A/c
(Interest Charges due)
  400 400
Oct.04 Bank A/c                               Dr
     To Chunilal
(60% of the amount with interest charges received by Cheque)
  30,400 30,400
Oct.04 Bill Receivable A/c               Dr.
     To Chunilal A/c
(New Bill was drawn and accepted)
  21,125 21,125
Dec.07 Chunilal A/c                         Dr.
   To Bill Receivable A/c 
(Bill cancelled on insolvency)
  21,125 21,125
Dec.07 Cash/Bank A/c                         Dr.
Bad-Debts A/c                         Dr.
     To Chunilal A/c          (Chunilal  became insolvent and only 30% of the amount recovered from his property)
  6,338
14,787
21,125

                                    Books Of Chunilal
                                    Journal Entry

Date Particulars L.F. Debit Amount (Rs.)

Credit Amount
(Rs.)

2010
Jun.01
Narayan A/c                       Dr.
  To Bills Payable
(Bill drawn and Accepted)
  50,000 50,000
Oct.04 Bills Payable A/c                 Dr.
Noting Charges A/c           Dr.
     To Narayan A/c
(Bill Cancelled with noting charges of rs.1,125 paid by Narayan's Bank A/c)
  50,000
1,125
51,125
Oct.04 Interest A/c                        Dr.
    To Narayan A/c
(Interest charges due)
  400 400
Oct.04 Narayan A/c                       Dr.
    To Bank A/c
(60% of the mount along with interest paid by cheque)
  30,400 30,400
Oct.04 Narayan A/c                        Dr.
   To Bill Payable A/c
(New bill was accepted for 40% of the amount along with noting charges)
  21,125 21,125
Dec.07 Bills Payable A/c                 Dr
    To Narayan A/c 
(Bill Cancelled on insolvency)
  21,125 21,125
Dec.07

Narayan A/c                      Dr
   To Cash/Bank A/c
   To Deficiency A/c
(Chunilal became insolvent and only 30% amount paid and rest of the amount written off as deficiency)

  21,125 21,125
Concept: Accounting Treatment of Bill - Journal Entries and Ledger
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APPEARS IN

Micheal Vaz Accounts - Book Keeping and Accountancy HSC 12th Standard Maharashtra State Board
Chapter 9 Bill of Exchange (Trade Bill)
Exercise | Q 10 | Page 318
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