Numerical Questions · Q1
Q.On Jan 01, 2016 Rao sold goods ₹10,000 to Reddy. Half of the payment was made immediately and for the remaining half Rao drew a bill of exchange upon Reddy payable after 30 days. Reddy accepted the bill and returned it to Rao. On the due date Rao presented the bill to Reddy and received the payment. Journalise the above transactions in the books Rao and prepare of Rao's account in the books of Reddy.
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✓ Free question
Sale ₹10,000: ₹5,000 received immediately in cash, ₹5,000 by a bill of exchange for 30 days. Maturity = date of drawing (Jan 01) + 30 days = Jan 31, plus 3 days of grace = 03 Feb 2016. No discount or interest arises (the bill is retained and met on the due date). Rao's personal account in Reddy's books nets to ₹5,000 on each side.
Books of Rao
| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
|---|---|---|---|---|
| 2016 Jan 01 | Cash A/c Dr. | 5,000 | ||
| Reddy's A/c Dr. | 5,000 | |||
| To Sales A/c | 10,000 | |||
| (Sold goods to Reddy, half the amount received in cash) | ||||
| 2016 Jan 01 | Bills Receivable A/c Dr. | 5,000 | ||
| To Reddy's A/c | 5,000 | |||
| (Received Reddy's acceptance payable after 30 days) | ||||
| 2016 Feb 03 | Cash A/c Dr. | 5,000 | ||
| To Bills Receivable A/c | 5,000 | |||
| (Bill met by Reddy on maturity) |
Rao's Account (in the books of Reddy)
| Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
|---|---|---|---|---|---|---|---|
| 2016 Jan 01 | To Bills Payable A/c | 5,000 | 2016 Jan 01 | By Purchases A/c | 5,000 | ||
| Total | 5,000 | Total | 5,000 |
✓Final answer
Maturity date 03 Feb 2016 (30 days + 3 days grace). Rao records Bills Receivable ₹5,000 and receives ₹5,000 cash on maturity. In Reddy's books Rao's Account is debited ₹5,000 (To Bills Payable) and credited ₹5,000 (By Purchases), balancing at ₹5,000.
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