Question 29 Chapter 14 – Class 11 Unimax

Question 29 Chapter 14 – Class 11 Unimax

29. A draws a bill for ₹ 3,000 and b accepts the same for the mutual accommodation of both of them to the extent of A 2/3 and B 1/3. A discount the same for ₹ 2,820 and remits 1/3 of proceeds to B. before the due date, B draws another bill for ₹ 4,200 on A in order to meet the first bill. The second bill is discounted for ₹ 4,080 with the help of which the first bill is met and ₹ 720 are remitted to A. before he due date of the second bill, A become bankrupt and B receives a dividend of 50 paise in a rupee in full settlement. Pass journal entries in the books of A and B.

The solution of Question 29 Chapter 14 – Class 11 Unimax

Journal for Mr. ‘X’ (Drawer)

Date	Particulars		L.F.	Debit	Credit
	Bill receivable A/c	Dr.		3,000
	To B’s A/c				3,000
	(Being acceptance of bill received from B for mutual accommodation)
	Bank A/c	Dr.		2,820
	Discount A/c	Dr.		180
	To Bills receivable A/c				3,000
	(Being bill discounted with bank)
	B’s A/c	Dr.		1,000
	To Cash A/c				940
	To Discount A/c				60
	(Being half the amount remitted)
Before Due date	B’s A/c	Dr.		4,200
	To Bills payable A/c				4,200
	(Being acceptance of bill given to B)
	Bank A/c	Dr.		720
	Discount A/c	Dr.		80
	To B’s A/c				800
	(Being cash received from B and discount allowed)
Before Due date	Bill payable A/c	Dr.		4,200
	To B’s A/c				4,200
	(Being insolvent & bill not met)
	B’s A/c (2,000+800)	Dr.		2,800
	To Cash A/c				1,400
	To Deficiency A/c				1,400
	(Being insolvent & only 50% paid to B)

 

Journal for Mr. ‘B’ (Drawee)

Date	Particulars		L.F.	Debit	Credit
	A’s A/c	Dr.		3,000
	To Bill payable A/c				3,000
	(Being acceptance of bill given to A)
	Cash A/c	Dr.		940
	Discount A/c	Dr.		60
	To A’s A/c				1,000
	(Being 1/3 amount of bill received from A with discount)
Before Due date	Bills receivable A/c	Dr.		4,200
	To A’s A/c				4,200
	(Being acceptance of bill received from A)
	Bank A/c	Dr.		4,080
	Discount A/c	Dr.		120
	To Bills receivable A/c				4,200
	(Being bill discounted with bank)
Due Date	Bills payable A/c	Dr.		3,000
	To Cash A/c				3,000
	(Being bill met on due date)
	A’s A/c	Dr.		800
	To Bank A/c				720
	To Discount A/c				80
	(Being cash paid to A)
	A’s A/c	Dr.		4,200
	To Bank A/c				4,200
	(Being bill not met on due date)
	Cash A/c	Dr.		1,400
	Bad debts A/c	Dr.		1,400
	To A’s (2,000+800) A/c				2,800
	(Being A become insolvent and only 50% amount of bill received from A)

Working Note:

(1) As soon as one party becomes insolvent after making dishonoured entry it should be found as to how much amount is due by A to B.

(2) Discounting charges of the second bill have been apportioned in the ratio in which X & Y shared the proceeds of the second bill i.e. 2:1 shown as follows:

Total proceeds received of the second bill

Amount paid on behalf of partners for 1st bill

	A	B
	2,000	1,000
Balance (₹ 4,080-3,000) 1,080, distributed as	720	360
	2,720	1,360
Ratio which proceeds of the second bill shared 2:1
Discounting charges of the second bill to be shared	80	80