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Numerical Questions · Q11

Q.On Jan 01, 2016 Neha sold goods for ₹20,000 to Muskan and drew upon her a bill of exchange payable after two months. One month before the maturity of the bill Muskan approached Neha to accept the payment against the bill at a rebate @ 12% p.a. Neha agreed to the request of Muskan and Muskan retired the bill under the agreed rate of rebate. Journalise the above transaction in the books of Neha and Muskan.

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Bill ₹20,000 for 2 months, dated 1 Jan 2016. Normal maturity = 1 Mar + 3 days grace = 4 Mar 2016. Muskan retires it one month early on 4 Feb 2016. Rebate = ₹20,000 × 12% × 1/12 = ₹200 (interest for the one unexpired month), so cash paid/received = ₹20,000 − ₹200 = ₹19,800. Neha debits Rebate on Bills (an expense/allowance); Muskan credits Rebate on Bills (a gain).

Books of Neha

DateParticularsL.F.Debit (₹)Credit (₹)
2016 Jan 01Muskan's A/c Dr.20,000
To Sales A/c20,000
(Sold goods to Muskan on credit)
2016 Jan 01Bills Receivable A/c Dr.20,000
To Muskan's A/c20,000
(Received Muskan's acceptance payable after two months)
2016 Feb 04Bank A/c Dr.19,800
Rebate on Bills A/c Dr.200
To Bills Receivable A/c20,000
(Bill retired one month before maturity; rebate @12% = ₹200)

Books of Muskan

DateParticularsL.F.Debit (₹)Credit (₹)
2016 Jan 01Purchases A/c Dr.20,000
To Neha's A/c20,000
(Purchased goods from Neha on credit)
2016 Jan 01Neha's A/c Dr.20,000

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