Page 149 - ISCDEBK-XI

17.14 Double Entry Book Keeping—ISC XI
Dinesh ...Dr. 2,000
To Bank A/c 2,000
(Being a part payment made)
Interest A/c (WN) ...Dr. 200
To Dinesh 200
(Being the interest payable to Dinesh for the extended period)
Dinesh ...Dr. 8,200
To Bills Payable A/c 8,200
(Being the acceptance of a new bill for the balance plus interest)
(ii) Bills Payable A/c ...Dr. 5,000
To Bank A/c 4,800
To Discount Received A/c 200
(Being the bill retired before maturity and discount received ` 200)
(iii) Bank A/c ...Dr. 11,760
Discounting Charges A/c ...Dr. 240
To Bills Receivable A/c 12,000
(Being the bill discounted for 2 months @ 12% p.a.)
Govinda ...Dr. 12,050
To Bank A/c 12,050
(Being the bill dishonoured and noting charges paid by bank ` 50)
Working Note: Interest = ` 8,000 × 10/100 × 3/12 = ` 200.
Illustration 7.
On 1st January, 2021, A sold goods of the value of ` 20,000 to B on credit and drew a bill for
3 months for the same amount which B accepted on the same date. The bill was discounted
for ` 19,700. On the due date, B notified his inability to meet the bill and requested A to
take it up and pay the noting charges of ` 150, which A did. The following day B met his
obligation with a bill at 2 months for the amount together with interest at 6% p.a. and paid
cash for noting charges. When the bill became due, B paid ` 10,000 and accepted a fresh bill at
3 months for ` 10,500. B became insolvent before this last bill became due and a first and final
dividend of 25 paise in the rupee was realised from his estate on 1st December, 2021.
Pass Journal entries in the books of A to record the above transactions.

Solution: In the Books of A
JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)
2021
Jan. 1 B ...Dr. 20,000
To Sales A/c 20,000
(Being the goods sold to B on credit)
Jan. 1 Bills Receivable A/c ...Dr. 20,000
To B 20,000
(Being the acceptance received of the bill drawn on B for 3 months)
Bank A/c ...Dr. 19,700
Discounting Charges A/c ...Dr. 300
To Bills Receivable A/c 20,000
(Being the bill discounted for ` 19,700)