On 1st March 2018, Mr. Mohan sold goods to Mr. Sohel for Rs. 5,00,000 and received Rs. 250000 in cash and drew two bills, first Rs. 2,00,000 and second for Rs. 50,000 of two months each. Both bills were duly accepted by Mr. Sohel. First bill was endorsed to Sohan in the settlement of his account of Rs. 220,000 and second bill was discounted from the bank at the rate of 15% pa. On the due date of these bills, both bills were dishonoured. Sohan paid Rs. 2000 and bank paid Rs. 1000 as noting charges.
Mr. Sohel paid Rs. 2,00,000 and noting charges in cash and accepted new bill for the balance for 4 months. The interest on the balance @ 20% pa was paid in cash. On the due date of the new bill, Mr. Sohel became insolvent and nothing is recovered from his property. Give journal entries in the books of drawer.
In the books of Mr. Mohan
1st March 2018
Mr. Sohel Account Debit Rs. 5,00,000
Sales Account Credit Rs. 5,00,000
When Mr. Mohan Draws two bills and Mr. Sohel Accepted.
1st March 2018
Cash Account Debit 250,000
1st B/R Account Debit 2,00,000
2nd B/R account Debit 50,000
Mr. Sohel Account Credit 5,00,000
When Mr. Mohan Endorsed to Mr. Sohan
Mr. Sohan Account Debit 220,000
1st Bill Receivable Account Credit 2,00,000
Discount Received Credit 20,000
When Second Bill has discounted from bank
Bank Account Debit Rs. 48750
Bill Discounting Account Debit 1250
2nd Bill Receivable Account Credit 50000
When Both Bills are Dishonoured by Drawee Mr. Sohel
4th May 2018
1st Bill
Mr. Sohel Account Debit 202000
Discount Received Account Debit 20000
Mr. Sohan Account Credit 222000
( Remember Journal entries of endorsed bill dishonored )
2nd Bill
Mr. Sohel Account Debit 51000
Bank Account Credit 51000
( Remember journal entries discounted bill with bank dishonored )
Mr. Sohel Paid Cash to Mr. Mohan
Cash Account Debit 2,03,000
Mr. Sohel Account Credit 2,03,000
When Interest Received in Cash on Balanced Amount for New Bill
Cash Account Debit 2500
Interest Account Credit 2500
When New Bill Draws
3rd Bill Receivable Account Debit 50000
Mr. Sohel Account Credit 50000
When Drawee Insolvent = Dishonoured bill
Mr. Sohel Account Debit 50000
3rd Bill Receivable Account Credit 50000
( Remember : Insolvency of Acceptor of Bill Journal Entries )
Transfer to BAD Debt Account Loss of receivable money from drawee or Debtor
BAD DEBTS Account Debit 50000
Mr. Sohel Account Credit 50000
Related Contents
- Renewal of Bill Journal Entries
- Bill Dishonour Journal Entries
- Bill Sent for Collection with Bank Journal Entries
- Bill Discounting with Bank Journal Entries
- Journal Entries for Endorsement of Bill
- Journal Entries of Bill of Exchange
- Accounting of Bill of Exchange
- Accommodation Bill Journal Entries
Reference
11th Class Accounting eBook
