Question No 40 Chapter No 15 - USHA Publication 11 Class

Question No 40 Chapter No 15

Table of Contents

The solution of Question No 40 Chapter No 15: –

Usha Publication – Elements of Book-Keeping PSEB (Class 11) – Solution

Renewal of Bill

40. Q drew a bill of exchange on P for Rs 4,000 on 1st May 2018 for 3 months. P returned the bill to Q after acceptance it. Q discounted the bill at his bank for Rs 3,900. Just before the due date, P approached Q for the renewal of the bill. Q agreed on condition that Rs 1,000 plus interest on the balance at 6% per annum for 3 months be paid in cash immediately and a new bill for 3 months be drawn for the remaining balance. These condition were carried rupee in full settlement
Give journal entries in the book of P and Q

The solution of Question No 40 Chapter No 15: –

In the book of P (Drawee)
Date	Particulars		L.F.	Debit	Credit
2018
May.1	Q A/c	Dr.		4,000
	To Bill payable A/c				4,000
	(Being acceptance given for three months.)

Aug.1	Bill payable A/c	Dr.		4,000
	To Q A/c				4,000
	(Being cancellation of the old bill.)

Aug.4	Q A/c	Dr.		1,000
	Interest A/c	Dr.		45
	To Cash A/c				1,045
	(Being part of payment made along with the interest.)

Aug.4	Q A/c	Dr.		3,000
	To Bill Payable A/c				3,000
	(Being new bill acceptance for the balance for 3 months.)

Nov.7	Bill Payable A/c	Dr.		3,000
	To Q A/c				3,000
	(Being bill dishonoured on Maturity.)

Oct.7	Q A/c	Dr.		3,000
	To Cash A/c				1,200
	To Deficiency A/c				1,800
	(Being payment of a dividend of 40 paise full satisfaction.)

In the book of Q (Drawer)
Date	Particulars		L.F.	Debit	Credit
2018
May.1	Bill Receivable A/c	Dr.		4,000
	To P A/c				4,000
	(Being receipt acceptance given for three months.)

May.1	Bank A/c	Dr.		3,900
	Discount A/c	Dr.		100
	To Bill Receivable A/c				4,000
	(Being receipt of an acceptance for one month.)

Aug.4	Cash A/c	Dr.		1,045
	To P A/c				1,000
	To Interest A/c				45
	(Being part payment received with interest.)

Aug.4	Bill Receivable A/c	Dr.		3,000
	To P A/c				3,000
	(Being receipt of new bill for the balance amount for 3 months.)

Nov.7	P A/c	Dr.		3,000
	To Bill Receivable A/c				3,000
	(Being dishonor of the bill due to P’s insolvency.)

Nov.7	Cash A/c	Dr.		1,200
	Bad Debts A/c	Dr.		1,800
	To P A/c				3,000
	(Being the receipt of a dividend of 40 paise in the rupee in the full satisfaction of our claim against P for Rs 3,000.)