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## Balance Sheet \$type=three\$count=6\$author=hide\$comment=hide\$label=hide\$date=hide\$show=home\$s=0

Example

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

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

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

Mr. Sohel Account Credit 50000

Related Contents

Reference

11th Class Accounting eBook

Name

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Accounting Education: Bill of Exchange Journal Entries Examples
Bill of Exchange Journal Entries Examples