Question

Ramesh sold goods to Ganesh on credit for Rs. 20,000. Ganesh accepted a bill of Rs. 20,000 for 3 months, drawn by Ramesh on the same date.

On the due date Ganesh dishonoured his acceptance. Then Ganesh approached Ramesh and requested for renewal of the bill.

Ramesh agreed on the condition that Ganesh should pay Rs. 10,000 in cash and accept a new bill for 2 months for the balance amount plus interest Rs. 200.

The new bill was drawn by Ramesh and accepted by Ganesh.

However one month before the due date Ganesh retired his acceptance by paying Rs. 9,900.

Pass necessary Journal Entries in the books of Ramesh.

Answer 1

Date	Particulars	LF	Debit	Credit
? 1.	Ganesh’s A/c …. Dr.		20000
	To Sales A/c			20000
	[Being the goods are sold]
2.	Bills Receivable A/c …. Dr.		20000
	To Ganesh’s A/c			20000
	[Being the bill is drawn]
3.	Ganesh’s A/c …. Dr.		20000
	To Bills Receivable A/c			20000
	[Being the bill is dishonoured]
4.	Ganesh’s A/c ….. Dr.		200
	To Interest A/c			200
	[Being the interest is charged]
5.	Cash A/c …. Dr.		10000
	To Ganesh ‘s A/c			10000
	[Being the part payment is made]
6.	Bills Receivable A/c …. Dr.		10200
	To Ganesh’s A/c			10200
	[Being the new bill is drawn along with interest]
7.	Bank A/c …. Dr.		9900
	Rebate A/c ….Dr.		300
	To Bills receivable A/c			10200
	[Being the new bill is retired]