| Kanika owes ₹ 26,000 to Mansi. Mansi drew a bill for ₹ 21,000 on Kanika for 3 months' period and received the balance of ₹ 5,000 by a crossed cheque. The bill was duly accepted and returned to Mansi. On the same day, Mansi endorsed Kanika's acceptance to Bansari. On the due dat

Question

| Kanika owes ₹ 26,000 to Mansi. Mansi drew a bill for ₹ 21,000 on Kanika for 3 months' period and received the balance of ₹ 5,000 by a crossed cheque. The bill was duly accepted and returned to Mansi. On the same day, Mansi endorsed Kanika's acceptance to Bansari. On the due date, Bansari informed Mansi that Kanika dishonoured her acceptance and noting charges 280 were paid. Mansi then drew a new bill for one month on Kanika including noting charges and interest ₹ 650. On the due date, Kanika honoured her acceptance by cheque. |
| --- |
Prepare:
Journal entries in the books of ‘Mansi’
‘Mansi’ account in the books of ‘Kanika’

Accepted Answer

>

> [!TLDR]
> Mansi draws a ₹21,000 bill and takes ₹5,000 by cheque for the ₹26,000 due, endorses the bill to Bansari, records dishonour (₹280 noting charges → Kanika owes ₹21,280), charges ₹650 interest, and draws a fresh one-month bill for ₹21,930 which is finally honoured. Kanika's ledger shows Mansi's Account balancing at ₹47,930.
>
> **Working Note — New bill amount:** ₹21,000 (old bill) + ₹280 (noting charges) + ₹650 (interest) = **₹21,930**.
>
> **Journal Entries in the books of Mansi**
>
> | Particulars | L.F. | Dr (₹) | Cr (₹) |
> | --- | --- | --- | --- |
> | Bills Receivable A/c ....... Dr | | 21,000 | |
> | Bank A/c ....... Dr | | 5,000 | |
> |   To Kanika A/c | | | 26,000 |
> | *(Bill drawn for ₹21,000 accepted by Kanika and balance ₹5,000 received by crossed cheque against ₹26,000 due)* | | | |
> | Bansari A/c ....... Dr | | 21,000 | |
> |   To Bills Receivable A/c | | | 21,000 |
> | *(Kanika's acceptance endorsed to Bansari)* | | | |
> | Kanika A/c ....... Dr | | 21,280 | |
> |   To Bansari A/c | | | 21,280 |
> | *(Bill dishonoured by Kanika; noting charges ₹280 paid by Bansari)* | | | |
> | Kanika A/c ....... Dr | | 650 | |
> |   To Interest A/c | | | 650 |
> | *(Interest charged to Kanika on renewal of the bill)* | | | |
> | Bills Receivable A/c ....... Dr | | 21,930 | |
> |   To Kanika A/c | | | 21,930 |
> | *(New one-month bill drawn including noting charges and interest)* | | | |
> | Bank A/c ....... Dr | | 21,930 | |
> |   To Bills Receivable A/c | | | 21,930 |
> | *(New bill honoured by Kanika on due date by cheque)* | | | |
>
> **Mansi's Account in the books of Kanika**
>
> | Dr — Particulars | Amount (₹) | Cr — Particulars | Amount (₹) |
> | --- | --- | --- | --- |
> | To Bills Payable A/c | 21,000 | By Balance b/d | 26,000 |
> | To Bank A/c | 5,000 | By Bills Payable A/c (dishonour) | 21,000 | …

Party	Role in a bill
Drawer	Person who makes/draws the bill
Payee	Person to whom payment is to be made
Endorsee	Person to whom the bill is transferred

Particulars	Dr (₹)	Cr (₹)
Bills Receivable A/c ....... Dr	21,000
Bank A/c ....... Dr	5,000
To Kanika A/c		26,000
(Bill drawn for ₹21,000 accepted by Kanika and balance ₹5,000 received by crossed cheque against ₹26,000 due)
Bansari A/c ....... Dr	21,000
To Bills Receivable A/c		21,000
(Kanika's acceptance endorsed to Bansari)
Kanika A/c ....... Dr	21,280
To Bansari A/c		21,280
(Bill dishonoured by Kanika; noting charges ₹280 paid by Bansari)
Kanika A/c ....... Dr	650
To Interest A/c		650
(Interest charged to Kanika on renewal of the bill)
Bills Receivable A/c ....... Dr	21,930
To Kanika A/c		21,930
(New one-month bill drawn including noting charges and interest)
Bank A/c ....... Dr	21,930
To Bills Receivable A/c		21,930
(New bill honoured by Kanika on due date by cheque)

Dr — Particulars	Amount (₹)	Cr — Particulars	Amount (₹)
To Bills Payable A/c	21,000	By Balance b/d	26,000
To Bank A/c	5,000	By Bills Payable A/c (dishonour)	21,000

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