On Feb. 02, 2017, Verma purchased from Sharma goods for ₹17,500. Verma paid ₹2,500 immediately and for the bal

Numerical Questions · Q16

Q. On Feb. 02, 2017, Verma purchased from Sharma goods for ₹17,500. Verma paid ₹2,500 immediately and for the balance gave a promissory note to Sharma payable after 60 days. Sharma immediately endorsed the promissory note in favour of his creditor Gupta for the full settlement of a debt of ₹15,400. On the due date of the bill Gupta presented the bill to Verma which the latter dishonoured and Gupta paid ₹50 noting charges. On the same date Gupta informed Sharma about the dishonour of the bill. Sharma settled his debt to Gupta by cheque for ₹15,500 which includes noting charges and interest. Verma settled Sharma's claim by cheque for the same amount. Record the necessary journal entries in the books of Sharma, Gupta and Verma for the above transaction and prepare Verma's and Gupta's accounts in the books of Sharma, Sharma's account in the books of Verma, and also Sharma's account in the books of Gupta.

ChseodishaTextbookSubjectiveImportance★★★★★est

87% · 48/55 Questions

🔒 Locked · start free trial →

You're viewing a preview — the full solution, concept, methods & PYQ mapping are locked.

Start your 14-day free trial to unlock the full solution →

Goods ₹17,500; ₹2,500 paid ⇒ promissory note = ₹15,000 for 60 days, dated Feb 02, 2017 ⇒ maturity = April 06, 2017 (60 days = Apr 03, + 3 days of grace). Sharma endorsed it to Gupta in settlement of ₹15,400 ⇒ discount ₹400. On dishonour noting = ₹50 ⇒ base claim ₹15,000 + ₹50 = ₹15,050. Sharma settles Gupta by cheque ₹15,500 = ₹15,000 + ₹50 noting + ₹450 interest (balancing figure); Verma settles Sharma for the same ₹15,500.

(The extracted source shows a garbled "₹5,000" for the noting charges; the ₹15,500 settlement (₹15,000 + ₹50 + ₹450) confirms the correct figure is ₹50.)

In the Books of Sharma — Journal

Date	Particulars	Debit (₹)	Credit (₹)
2017 Feb. 02	Verma's A/c Dr.	17,500
	To Sales A/c		17,500
2017 Feb. 02	Cash/Bank A/c Dr.	2,500
	To Verma's A/c		2,500
2017 Feb. 02	Bills Receivable A/c Dr.	15,000
	To Verma's A/c		15,000
2017 Feb. 02	Gupta's A/c Dr.	15,400
	To Bills Receivable A/c		15,000
	To Discount Received A/c		400
2017 Apr. 06	Verma's A/c Dr.	15,050
	To Gupta's A/c		15,050
2017 Apr. 06	Interest A/c Dr.	450
	To Gupta's A/c		450
2017 Apr. 06	Verma's A/c Dr.	450
	To Interest A/c		450
2017 Apr. 06	Gupta's A/c Dr.	15,500
	To Bank A/c		15,500
2017 Apr. 06	Bank A/c Dr.	15,500
	To Verma's A/c		15,500

In the Books of Gupta — Journal

Date	Particulars	Debit (₹)	Credit (₹)
2017 Feb. 02	Bills Receivable A/c Dr.	15,000
	Discount Allowed A/c Dr.	400
	To Sharma's A/c		15,400
2017 Apr. 06	Sharma's A/c Dr.	15,050
	To Bills Receivable A/c		15,000
	To Cash A/c		50
2017 Apr. 06	Sharma's A/c Dr.	450
	To Interest A/c		450
2017 Apr. 06	Bank A/c Dr.	15,500
	To Sharma's A/c		15,500

In the Books of Verma — Journal

Date	Particulars	Debit (₹)	Credit (₹)
2017 Feb. 02	Purchases A/c Dr.	17,500
	To Sharma's A/c		17,500
2017 Feb. 02	Sharma's A/c Dr.	2,500
	To Cash/Bank A/c		2,500
2017 Feb. 02	Sharma's A/c Dr.	15,000
	To Bills Payable A/c		15,000
2017 Apr. 06	Bills Payable A/c Dr.	15,000
	Noting Charges A/c Dr.	50
	To Sharma's A/c		15,050
2017 Apr. 06	Interest A/c Dr.	450
	To Sharma's A/c		450
2017 Apr. 06	Sharma's A/c Dr.	15,500
	To Bank A/c		15,500

Verma's Account (in the Books of Sharma)

Date	Particulars	Amount (₹)	Date	Particulars	Amount (₹)
2017 Feb. 02	To Sales A/c	17,500	2017 Feb. 02	By Cash/Bank A/c	2,500
2017 Apr. 06	To Gupta's A/c (dishonour)	15,050	2017 Feb. 02	By Bills Receivable A/c	15,000
2017 Apr. 06	To Interest A/c	450	2017 Apr. 06	By Bank A/c	15,500
	Total	33,000		Total	33,000

Gupta's Account (in the Books of Sharma)

Date	Particulars	Amount (₹)	Date	Particulars	Amount (₹)
2017 Feb. 02	To Bills Receivable A/c	15,000	2017 Feb. 02	By Balance b/d	15,400
2017 Feb. 02	To Discount Received A/c	400	2017 Apr. 06	By Verma's A/c (dishonour)	15,050
2017 Apr. 06	To Bank A/c	15,500	2017 Apr. 06	By Interest A/c	450

Start your 14-day free trial to unlock the full solution →

←Previous question · questions-for-practiceQ15 — Asha sold goods worth ₹19,000 to Nisha on March 02, 2017. ₹4,000 were …→Next question · questions-for-practiceQ17 — Lilly sold goods to Methew on 1.3.2017 for ₹12,000 and drew upon Methe…

🎓Unlock everything free for 14 days

Unlock everything free for 14 days