Question

Siddhant sold goods to Sudhir of  ₹ 43,800 on 18^th March 2019. Siddhant draws a bill on Sudhir on the same day for ₹ 43,800 for 3 months which was duly accepted by Sudhir. Siddhant discounted the bill on the same day at 8% p.a. the bill was dishonoured on the due date and Sudhir requested Siddhant to accept ₹ 13,800 and interest in cash on remaining amount at 12% p.a. Siddhant agreed and for the balance, the amount accepted a new bill at 2 months. Before the due date of new bill, Sudhir retired the bill by paying ₹ 29,700.

Pass necessary Journal Entries in the Books of Siddhant.

Answer 1

In the books of Siddhant

Journal Entries
Date	Particulars		L. F.	Debit (₹)	Credit (₹ )
2019
March 18	Sudhir’s A/c	Dr.		43,800
	To Sales A/c				43,800
	(Being goods sold on credit)
March 18	Bills Receivable A/c	Dr.		43,800
	To Sudhir’s A/c				43,800
	(Being bill drawn for 3 months and acceptance received.)
March 18	Cash/Bank A/c	Dr.		42,924
	Discount A/c	Dr.		876
	To Bill Receivable A/c				43,800
	(Being bill discount with bank @8% p.a. at 3 months)
June 21	Sudhir’s A/c	Dr.		43,800
	To Cash/Bank A/c				43,800
	(Being Sudhir’s acceptance dishonoured on due date)
June 21	Cash A/c	Dr.		14,400
	To Interest A/c				600
	To Sudhir’s A/c				13,800
	(Being cash accepted with interest from Sudhir)
June 21	New Bills Receivable A/c	Dr.		30,000
	To Sudhir’s A/c				30,000
	(Being Sudhir’s acceptance received for the new bill)
-	Cash / Bank A/c	Dr.		29,700
	Rebate A/c	Dr.		300
	To New Bills Receivable A/c				30,000
	(Being before the due date, Sudhir’s retired the bill with a discount)
				2,49,600	2,49,600

Working Notes :

(1) March 18, Discount = `43,800 × 3/12 × 8/100` = ₹ 876

(2) March 21, calculation of interest balance amount :

I = `"PRN"/100 = 30,000 × 12/100 × 2/12`

[for 2 months on remaining amount ₹ 30,000] = ₹ 600

(3) Before due date bill was retired by Sudhir by paying ₹ 300 less which is considered as discount and as date is not given, here it is not recorded.