Page 142 - ISCDEBK-XI

Bill of Exchange 17.7
Illustration 2.

On 12th February, 2021, X sold goods for ` 6,000 to Y. On 15th February, 2021, X drew three
bills of exchange worth ` 3,000, ` 2,000 and ` 1,000 payable after 3 months, 2 months and
1 month respectively. Y accepted all the bills and returned them to X immediately. X discounted
the first bill on 15th March, 2021 @ 10% p.a. with his bank. He endorsed the second bill to Z
on 20th February, 2021. He retained the third bill till maturity.
Y met the third bill on due date but dishonoured the first and the second bills. Noting charges
amounting to ` 25 for each of these two bills were incurred.

Y was declared insolvent and could pay only 50 paise in a rupee on 30th May, 2021 in
full settlement.
Pass Journal entries in the books of X and Y.

Solution:

JOURNAL OF X
Date Particulars L.F. Dr. (`) Cr. (`)

2021
Feb. 12 Y ...Dr. 6,000
To Sales A/c 6,000
(Being the goods sold to Y on credit)

Feb. 15 Bills Receivable (I, II & III) A/c ...Dr. 6,000
To Y 6,000
(Being the bills for ` 3,000, ` 2,000 and ` 1,000 accepted by
Y payable after 3 months, 2 months and 1 month respectively)
Feb. 20 Z ...Dr. 2,000
To Bills Receivable (II) A/c 2,000
(Being the bills receivable endorsed)

March 15 Bank A/c ...Dr. 2,947
Discounting Charges A/c ...Dr. 53
To Bills Receivable (I) A/c 3,000
(Being the bill receivable discounted with the bank and discounting
charges recorded)

March 18 Bank A/c ...Dr. 1,000
To Bills Receivable (III) A/c 1,000
(Being the bill held till maturity paid by the drawee)