Question No 36 Chapter No 16 - T.S. Grewal 11 Class

Question No 36 Chapter No 16

36. Amar sells goods to Bhola for 10,000 and draws upon him a bill for the amount payable 3 months after date. The bill is accepted by Bhola. Amar discounts the bill with his bankers at a discount of 150 inclusive of all charges. Bhola fails to meet this bill on maturity. Amar pays off his banker and his expenses amounting to 100. Bhola gives a fresh bill, 2 months’ date to Amar for 10,250, which he met at maturity. Show the necessary Journal entries in Amar’s books.

The solution of Question No 36 Chapter No 16:-

Books of Amar
Date	Particulars		L.F.	Debit	Credit
	Bhola	Dr.		10,000
	To Sales A/c				10,000
	(Being Goods were sold to Bhola)
	Bills Receivable A/c	Dr.		10,000
	To Bhola				10,000
	(Being Bhola ′s acceptance was received)
	Bank A/c	Dr.		9,850
	Discount Charges A/c	Dr.		150
	To Bank A/c				10,000
	(Being A′s acceptance dishonoured)
	Bhola	Dr.		400
	To Bank A/c				400
	(Being Bhola ′s acceptance declared dishonoured)
	Bank A/c	Dr.		400
	To Cash A/c				400
	(Being Payment made to bank with noting charges for dishonouring of the bill )
	Bhola	Dr.		150
	To Interest A/c				150
	(Being Interest due from Bhola for on account of bill dishonour)
	Bills Receivable A/c	Dr.		400
	To Bhola				400
	(Being New bill accepted by Bhola for the amount due including rating charges and interest)
	Cash A/c	Dr.		10,250
	To Bills Receivable A/c				10,250
	(Being Amount received)

Books of A
Date	Particulars		L.F.	Debit	Credit
	B A/c	Dr.		400
	To Bills Payable A/c				400
	(Being Bill drawn by A was accepted)
	Bills Payable A/c	Dr.		400
	To B				400
	(Being Bill drawn by B was dishonoured on maturity)

Case b The bills met at maturity

Books of B
Date	Particulars		L.F.	Debit	Credit
	Bills Receivable A/c	Dr.		400
	To Sales A/c				400
	(Being A′s acceptance was received)
	Bank A/c	Dr.		380
	Discount Charges A/c	Dr.		20
	To Bills Receivable A/c				400
	(Being A′s acceptance was discounted with the bank)

Books of A
Date	Particulars		L.F.	Debit	Credit
	B A/c	Dr.		400
	To Bills Payable A/c				400
	(Being Bill drawn by A was accepted)
	Bills Payable A/c	Dr.		400
	To Cash A/c				400
	(Being Bill drawn by B was dishonoured on maturity)

Case c If the bill is retired under rebate at 6% p.a. 2 months before its maturity

Advertisement-X

Books of B
Date	Particulars		L.F.	Debit	Credit
	Bills Receivable A/c	Dr.		400
	To Sales A/c				400
	(Being A′s acceptance was received)
	Bank A/c	Dr.		396
	Rebate A/c	Dr.		4
	To Bills Receivable A/c				400
	(Being payment received 2 months before its maturity and giver bate)

Working Note:

Calculation of Discount charges	=	Bills receivable	X	Rate	X	Period of Maturity
				100		12

=	400	X	6	X	2
			100		12

= Rs 4

Books of A
Date	Particulars		L.F.	Debit	Credit
	B A/c	Dr.		400
	To Bills Payable A/c				400
	(Being Bill drawn by A was accepted)
	Bills Payable A/c	Dr.		400
	To Cash A/c				396
	To Rebate A/c				4
	(Being payment received 2 months before its maturity and giver bate)

Bill of exchange (BOE): Meaning and Examples

Advertisement-X

Thanks, Please Like and share with your friends

Comment if you have any question.

Also, Check out the solved question of previous Chapters: –

- Chapter No. 1 – Introduction to Accounting
- Chapter No. 2 – Basic Accounting Terms
- Chapter No. 3 – Theory Base of Accounting, Accounting Standards and International Financial Reporting Standards(IFRS)
- Chapter No. 4 – Bases of Accounting
- Chapter No. 5 – Accounting Equation
- Chapter No. 6 – Accounting Procedures – Rules of Debit and Credit
- Goods and Services Tax(GST)
- Chapter No. 7 – Origin of Transactions – Source Documents and Preparation of Vouchers
- Chapter No. 8 – Journal
- Chapter No. 9 – Ledger
- Chapter No. 10 – Special Purpose Books I – Cash Book
- Chapter No. 11 – Special Purpose Books II – Other Books
- Chapter No. 12 – Bank Reconciliation Statement
- Chapter No. 13 – Trial Balance
- Chapter No. 14 – Depreciation
- Chapter No. 15 – Provisions and Reserves
- Chapter No. 16 – Accounting for Bills of Exchange
- Chapter No. 17 – Rectification of Errors
- Chapter No. 18 – Financial Statements of Sole Proprietorship
- Chapter No. 19 – Adjustments in preparation of Financial Statements
- Chapter No. 20 – Accounts from incomplete Records – Single Entry System
- Chapter No. 21 – Computers in Accounting
- Chapter No. 22 – Accounting Software – Tally
- Chapter No. 5 – Accounting Equation
- Chapter No. 6 – Accounting Procedures – Rules of Debit and Credit
- Goods and Services Tax(GST)
- Chapter No. 8 – Journal
- Chapter No. 9 – Ledger
- Chapter No. 10 – Special Purpose Books I – Cash Book