Question No 28 Chapter No 14 – Class 11 Unimax

28. X draws on Y, for the mutual accommodation of both a bill for ₹ 2,000 on 1st February at 3 months. X discounts the bill for ₹ 1,960 and remits half the proceed to Y. On maturity, X is unable to send the amount due and therefore Y draws on X a bill for ₹ 2,500 which is duly accepted by X. Y discounts the bills for ₹ 2,400 and remits ₹ 200 to X. Before the bill is due for payment. X become insolvent. Later 30% dividend from his estate.
Give X’s account in Y’s account in X’s books.

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The solution of Question No 28 Chapter No 14 – UNIMAX Class 11

Advanced Accountancy – Unimax Class 11 – 2021 – Solution.

The solution of Question No 28 Chapter No 14 – UNIMAX Class 11

Journal for Mr. ‘X’ (Drawer)
Date	Particulars		L.F.	Debit	Credit

Feb. 1	Bill receivable A/c	Dr.		2,000
	To Y’s A/c				2,000
	(Being acceptance of bill received from Y for mutual accommodation)

Feb. 1	Bank A/c	Dr.		1,960
	Discount A/c	Dr.		40
	To Bills receivable A/c				2,000
	(Being bill discounted with bank)

Feb.1	Y’s A/c	Dr.		1,000
	To Cash A/c				980
	To Discount A/c				20
	(Being half the amount remitted)

May 4	Y’s A/c	Dr.		2,500
	To Bills payable A/c				2,500
	(Being acceptance of bill given to Y)

May 4	Cash A/c	Dr.		200
	Discount A/c	Dr.		50
	To Y’s A/c				250
	(Being cash received from Y and discount allowed)

Due date	Bill payable A/c	Dr.		2,500
	To Y’s A/c				2,500
	(Being insolvent & bill not met)

Before Due date	Y’s A/c (1,000+250)	Dr.		1,250
	To cash A/c				375
	To Deficiency A/c				875
	(Being insolvent & only 30% paid to Y)

Dr.	Y’s A/c						Cr.
Date	Particulars	J.F.	Amount	Date	Particulars	J.F.	Amount
Feb. 1	To cash A/c		980	Feb. 1	By Bill receivable A/c		2,000
Feb. 1	To Discount A/c		20	Mar. 4	By Discount A/c		50
May 4	To Bill payable A/c		2,500	May 4	By Cash A/c		200
	To Cash A/c		375		By Bill Payable A/c		2,500
	To Deficiency A/c		875

			4,750				4,750

Journal for Mr. ‘Y’ (Drawee)
Date	Particulars		L.F.	Debit	Credit

Feb. 1	X’s A/c	Dr.		2,000
	To Bill payable A/c				2,000
	(Being acceptance of bill given to X for 3 months)

Feb. 1	Cash A/c	Dr.		980
	Discount A/c	Dr.		20
	To X’s A/c				1,000
	(Being half the amount of bill received from X)

May 4	Bills payable A/c	Dr.		2,000
	To Cash A/c				2,000
	(Being bill met on due date)

May 4	Bills receivable A/c	Dr.		2,500
	To X’s A/c				2,500
	(Being acceptance of bill received from X)

May 4	Bank A/c	Dr.		2,400
	Discount A/c	Dr.		100
	To Bills receivable A/c				2,500
	(Being bill discounted with bank)

May 4	X’s A/c	Dr.		250
	To Cash A/c				200
	To Discount A/c				50
	(Being cash paid to X)

Before Due date	X’s A/c	Dr.		2,500
	To Bank A/c				250
	(Being bill not met on due date by X)

Before Due date	Cash A/c	Dr.		375
	Bad debts A/c	Dr.		875
	To X’s (1,000+250) A/c				1,250
	(Being ‘X’ become insolvent and only 30% amount received from him)

Dr.	X’s A/c						Cr.
Date	Particulars	J.F.	Amount	Date	Particulars	J.F.	Amount
Feb. 1	To Bills payable A/c		2,000	Feb. 1	By Bill receivable A/c		23,000
Mar. 4	To Discount A/c		50	Feb. 1	By Bill receivable A/c		23,485
May 4	To cash A/c		200	Mar. 4	By Cash A/c		10,000
	To Bank A/c		2,500		By Bill receivable A/c		13,985


			4,750				4,750

Working Note:

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(i) As soon as one party become insolvent after making dishonoured entry it should be found as to how much amount is due by ‘X’ to ‘Y’ for which we should prepare X’s account in Y’s books and Y’s A/c in X’s book. Both will show the same amount with different balance (Dr. or Cr.)

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

Total proceeds received of second bill

Amount paid on behalf of partners for 1st bill

	X	Y
	1,000	1,000
Balance (₹ 2,400-2,000) 400, distributed as	200	200
	1,200	1,200
Ratio which proceeds of second bill shared 1:1
Discounting charges of second bill to be shared	50	50