Question No 22 Chapter No 13

Insolvency of the Acceptor

22. A sells goods for Rs 8,000 to B on Jan 1, 2017 and on the same date draws a bill for 3 months on the latter for the amount. B accepts it and retunes it to A, who discounts it with his banker for Rs 7,850. on the date, due date the bill is dishonoured. Noting charges of Rs 150 were paid by the bank. B then pays Rs 3,000 in cash and accepts a new bill at three months for Rs 5,350. Before maturity, B became insolvent and a final dividend of 50 paise in the Rs was received. Give journal entries to record this transaction in the books of A and B.

## The solution of Question No 22 Chapter No 13: –

 In the books of A Date Particulars L.F. Debit Credit 2018 Jan.1 B A/c Dr. 8,000 To Sale A/c 8,000 (Being goods sold to B.) Jan.1 Bill Receivable A/c Dr. 8,000 To B A/c 8,000 (Being three bills drew on B and acceptance received from him.) Jan.1 Bank A/c Dr. 7,850 Discount A/c Dr. 150 To Bill Receivable A/c 8,000 (Being bill discounted from the bank) Apr.04 Bill Receivable A/c Dr. 8,000 Noting Charges A/c Dr. 150 To Bank A/c 8,150 (Being bill dishonoured and noting charges ) Apr.04 Cash A/c Dr. 3,000 To B A/c 3,000 (Being cash received from B) Apr.04 Bill Receivable A/c Dr. 5,350 To B A/c 5,350 (Being the third bill was dishonoured ) Apr.04 Cash A/c Dr. 3,264 Bad debts A/c Dr. 4,896 To Bill Receivable A/c 5,350 (Being the third bill was dishonoured )
 In the books of B Date Particulars L.F. Debit Credit 2018 Jan.1 Purchases A/c Dr. 8,000 To A A/c 8,000 (Being purchases goods from A) Jan.1 A A/c Dr. 8,000 To Bill Payable A/c 8,000 (Being three bills drew by Satish acceptance by us.) Apr.04 Bill Payable A/c Dr. 8,000 To A A/c 8,000 (Being cash paid to Amit) Apr.04 A A/c Dr. 3,000 To Cash A/c 3,000 (Being cash paid to A) Apr.04 A A/c Dr. 5,350 To Bill Payable A/c 5,350 (Being purchases goods from A.) Dec.07 Bill Payable A/c (iii) Dr. 5,350 To Cash A/c 3,264 To Deficiency A/c 4,896 (Being bill dishonoured and paid 40% in cash )

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