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Question No 38 Chapter No 15 - USHA Publication 11 Class

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Question No 38 Chapter No 15

Renewal of Bill

38. B sends his promissory note for 3 months to C for Rs 6,000 on May 1,2018. C gets it discounted with his bankers @6 percent per annum. On the due date, the bill is dishonoured, the bank paying Rs 100 as noting charges. C agreed to accept Rs 2,250 in cash (Rs 250 for nothing charges and interest) and another promissory note for Rs 4,000 for 2 months. On the due date, B approaches C again and asks for renewal of the bill for a further period of 3 months. C egress to the request provided B pays Rs 200 as interest in cash. The last bill is paid o Maturity
Draft journal entries in the book of B and C.

The solution of Question No 38 Chapter No 15: -

In the book of B (Drawee)

Date	Particulars		Debit	Credit
2018
May.1	C A/c	Dr.	6,000
	To Bill payable A/c			6,000
	(Being goods purchased on credit .)

Aug.4	Bill payable A/c	Dr.	6,000
	Nothing charges A/c	Dr.	100
	To C A/c			6,100
	(Being cancellation of the old bill.)

Aug.4	C A/c	Dr.	2,100
	Interest A/c	Dr.	150
	To Bill Payable A/c			2,250
	(Being payment of interest and part payment of the amount due to C.)

Aug.4	C A/c	Dr.	4,000
	To Bill Payable A/c			4,000
	(Being a new bill accepted in favour of Bimal including interest.)

Oct.7	Bill Payable A/c	Dr.	4,000
	To C A/c			4,000
	(Being payment of the bill on maturity.)

Oct.7	Interest A/c	Dr.	200
	To Cash A/c			200
	(Being interest paid in cash .)

Oct.7	C A/c	Dr.	4,000
	To Bill Payable A/c			4,000
	(Being acceptance of a fresh bill at 3 months.)
2019
Jan.10	Bill Payable A/c	Dr.	4,000
	To Cash A/c			4,000
	(Being payment of the bill on the due date .)

In the book of C (Drawer)

Date	Particulars		Debit	Credit
2018
May.1	Bill Receivable A/c	Dr.	6,000
	To B A/c			6,000
	(Being receipt of an acceptance.)

May.1	Bank A/c	Dr.	5,910
	Discount A/c	Dr.	90
	To Bill Receivable A/c			6,000
	(Being receipt of an acceptance for one month.)

Aug.4	B A/c	Dr.	6,100
	To Bank A/c			6,100
	(Being cancellation of the bill.)

Aug.4	Cash A/c	Dr.	2,250
	To B A/c			2,100
	To Interest A/c			150
	(Being receipt of interest and part payment of 1 amount due to B.)

Aug.4	Bill Receivable A/c	Dr.	4,000
	To B A/c			4,000
	(Being receipt of an acceptance for the balance amount.)

Oct.7	B A/c	Dr.	4,000
	To Bill Receivable A/c			4,000
	(Being cancellation of Bill.)

Oct.7	Cash A/c	Dr.	200
	To Interest A/c			200
	(Being the receipt of interest.)

Oct.7	Bill Receivable A/c	Dr.	4,000
	To B A/c			4,000
	(Being the receipt for a fresh acceptance at three months.)
2019
Jan.10	Cash A/c	Dr.	4,000
	To Bill Receivable A/c			4,000
	(Being the payment of bill received on maturity.)