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Amarnath drew on Parker a bill of Exchange for ₹ 1,00,000 on 1st January payable after three month from 1st January, which parker accepted. On 4th January, Amarnath discounted the bill with his bankers @ 18% p.a. Parker failed to meet the bill on due date and the bill was returned to Amarnath with bank charges of ₹ 200 debited to Him by the bank.
Amarnath claimed the bill value plus bank charges from Parker. However, only 40% of the amount claimed could be recovered by Amarnath on 8th April as Parke was declared insolvent.
Pass journal entries in the books of Amarnath and parker for the above transactions.
Journal for Mr. ‘Amarnath’ (Drawer)
| Date | Particulars |
L.F. | Debit | Credit | |
|---|---|---|---|---|---|
| Jan. 1 | Bill receivable A/c | Dr. | 1,00,000 | ||
| To Parker A/c | 1,00,000 | ||||
| (Being bill drawn for three months, accepted & retuned by Parker) | |||||
| Jan. 4 | Bank A/c | Dr. | 95,500 | ||
| Discount A/c | Dr. | 4,500 | |||
| To Bill receivable A/c | 1,00,000 | ||||
| (Being bill discounted with banker @ 18% p.a.) | |||||
| Apr. 7 | Parker A/c | Dr. | 1,00,200 | ||
| To Bank A/c | 1,00,200 | ||||
| (Being bill not met on due date & Bank charges paid) | |||||
| Apr. 8 | Cash A/c | Dr. | 40,080 | ||
| Bad debts A/c | Dr. | 60,120 | |||
| To Parker a/c | 1,00,200 | ||||
| (Being Parker become insolvent & only 40% amount received from him) | |||||
Journal for Mr. ‘Parker’ (Drawee)
| Date | Particulars |
L.F. | Debit | Credit | |
|---|---|---|---|---|---|
| Jan. 1 | Amarnath A/c | Dr. | 1,00,000 | ||
| To Bill payable A/c | 1,00,000 | ||||
| (Being acceptances of bill given to Amarnath) | |||||
| Apr. 4 | Bills payable A/c | Dr. | 1,00,000 | ||
| Bank charges A/c | Dr. | 200 | |||
| To Amarnath A/c | 1,00,200 | ||||
| (Being bill dishonoured on due date and bank charges paid) | |||||
| Apr. 8 | Amarnath A/c | Dr. | 1,00,200 | ||
| To Cash A/c | 40,080 | ||||
| To Deficiency A/c | 60,120 | ||||
| (Being insolvent and only 40% amount paid to Amarnath in full settlement) | |||||
Read out the full article to know the meaning of Cash Book
Bill of exchange (BOE): Meaning and Examples
Also, Check out the same article in Hindi from the following link
Bill of exchange (BOE): Meaning and Examples
Also, Check out the solved question of all Chapters: –
Part-I
Students may choose only one part from the Part II and Part III
Part-II
Part-III
Check out T.S. Grewal +1 Book 2019 @ Oficial Website of Sultan Chand Publication
Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
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