Question

On 1^st 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.

Answer 1

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