Page 150 - ISCDEBK-XI

Bill of Exchange 17.15
April 4 B ...Dr. 20,150
To Bank A/c 20,150
(Being the bill dishonoured at maturity—noting charges
` 150 paid by bank)
April 5 Cash A/c ...Dr. 150
To B 150
(Being the noting charges received in cash)
April 5 B ...Dr. 200
To Interest A/c 200
(Being the interest charged for 2 months @ 6% p.a. on ` 20,000)
April 5 Bills Receivable A/c ...Dr. 20,200
To B 20,200
(Being a fresh bill drawn on B for 2 months)
June 8 B ...Dr. 20,200
To Bills Receivable A/c 20,200
(Being the bill dishonoured at maturity)
June 8 Cash A/c ...Dr. 10,000
To B 10,000
(Being the part payment received)
June 8 B ...Dr. 300
To Interest A/c 300
(Being the interest charged for the period extended)
June 8 Bills Receivable A/c ...Dr. 10,500
To B 10,500
(Being a further bill drawn on B for 3 months)
Sept. 11 B ...Dr. 10,500
To Bills Receivable A/c 10,500
(Being the 3rd bill also dishonoured)
Dec. 1 Bank A/c ...Dr. 2,625
Bad Debts A/c ...Dr. 7,875
To B 10,500
(Being a first and final dividend received from the estate of
B @ 25 paise in a rupee)

Illustration 8.
K owes ` 60,000 to Z. The debt is discharged by K on 1st June, 2021 by accepting two bills
of exchange drawn on him by Z—one for ` 40,000 at 2 months and the other for ` 20,000 at
3 months. The first bill is endorsed in favour of R, a creditor, in full settlement of his debt
for ` 42,000. The second bill is discounted with the bank at 15% p.a. on 4th June. Both the
bills were dishonoured, the noting charges in each case being ` 600. On 5th September,
K agreed to accept another bill for the total amount including interest @ 18% p.a. payable after
3 months. On the due date the bill was dishonoured. K was declared insolvent and a final
dividend @ 30% was realised from his estate.

Show the Journal entries in the books of Z and K.