Q.On 1st August 2026, Ravi sold goods to Kiran for Rs 12,000. Ravi drew a bill for 3 months, which Kiran accepted, and Ravi retained it till maturity. Before the due date, Kiran requested Ravi to cancel this bill and accept a new bill for 2 months instead, together with interest at 12% p.a. on Rs 12,000 for 2 months. Ravi agreed. Give the journal entries for the renewal only, in the books of both Ravi (drawer) and Kiran (drawee).

Dishonour occurs when the drawee fails to pay on the due date; the debt reverts to an ordinary personal account, increased by any noting charges (the Notary's fee for certifying the dishonour, recoverable from the defaulting drawee). Drawer: Drawee's A/c Dr (bill amount + noting charges), To Bills Receivable A/c (if retained) or To Bank A/c (if discounted/collected — the bank recovers its payment plus noting charges from the drawer). Drawee: Bills Payable A/c Dr + Noting Charges A/c Dr, To Drawer's A/c. Renewal: before the due date, the drawee requests cancellation of the old bill and a fresh bill (usually plus interest) for a later date — three-step entries (cancel old bill, charge/record interest, record new bill) mirrored in both parties' …