Raja of Nagpur draws a bill on Pradhan of Bhandara for Rs. 6,000 at 3 months. Pradhan accepted and returned it to Raja. Raja then sent the bill to bank for collection.

On due date, Pradhan finds himself unable to make payment of the bill and requests Raja to renew it. Raja accepted a proposal on the condition that, Pradhan should pay Rs. 1,000 on account along with interest Rs. 250 in cash and should accept new bill for the balance at 2 months. These arrangements were carried through. Afterwards, one month before due date of new bill Pradhan retired his acceptance by paying Rs. 4,850.

Give Journal entries in the books of Raja of Nagpur.  [10]

Answer:
Journal Entries in the books of Raja of Nagpur.


Date
Particulars
L.F.
Debit
Rs.
Credit
Rs.
(1)
Bills Receivable A/c ...... Dr.

6000


To Pradhan A/c


6000

[Being the bill is drawn]








(2)
Bank for collection A/c ....... Dr.

6000


To Bills Receivable A/c


6000

[Being the bill is sent for bank for collection]








(3)
Pradhan A/c ....... Dr.

6000


To Bank for collection A/c


6000

[Being the bill is dishonoured]








(4)
Pradhan A/c ....... Dr.

250


To Interest A/c


250

[Being interest is charged on balance Amount]








(5)
Cash A/c

1250


To Pradhan A/c


1250

[Being the part payment is made along with interest]








(6)
Bills Receivable A/c

5000


To Pradhan A/c


5000

[Being the new bill is drawn]








(7)
Cash / Bank A/c .... Dr.

4850


Rebate A/c ..... Dr.

150


To Bills Receivable A/c


5000

[Being the bill is retired]



10 comments:

Unknown said...

How did 5000 came? In6th entry

Unknown said...

6000+250-1250 -5000

Unknown said...

But 5000?? Kaise aaya....1250-5000 se hi karenge (reason)

Ganesh said...

Drawee pay 1000 in advance than and few days the new bill will drawn for 5000
6000—1000
And interest will not count on bill

Anonymous said...

How did 5000 come ??

Itachi said...

Sir we can also take combined entry of intrest charged with intrest right
Cash ac dr.
To intrest ac
To pradhan ac.

Itachi said...

Bhai ussne advance 1k diya aur total 6k dene ka tha so 6k-1k = 5000
Aur vo intrest isiliye laga hai qki ussne paise dene mai time lagaya aur upr se renew krna cha ha

Chirag said...

No,Entry of interest receivable and interest paid will be separated interest paid+1000 cash will be different from interest receivable.

Unknown said...

I can understood because 1250 paid in cash and 5000 amt. It will be recovered by him. So, thanks for problems with solutio.

Unknown said...

Yes...but we can take cash a/c
B/R
To pradhan?

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