Q.On Jan. 01, 2017 Harsh accepted a months bill for ₹10,000 drawn on him by tanu for latter's benefit. Tanu discounted the bill on same day @ 8% p.a On the due date tanu sent a cheque to Harsh for honour the bill. Harsh duly honoured his acceptance. Record the journal entries in the Books of Tanu and Harsh.

Accommodation bill for Tanu's sole benefit — no goods change hands, so there is no purchases/sales entry, only the bill and the cash movements. Bill ₹10,000 for 1 month dated 01 Jan 2017 (maturity = Jan 01 + 1 month = Feb 01 + 3 days grace = 04 Feb 2017). Tanu discounts it the same day at 8% p.a.: discount = ₹10,000 × 8/100 × 1/12 = ₹66.67, bank pays ₹10,000 − ₹66.67 = ₹9,933.33. Because the accommodation is entirely for Tanu, Tanu alone bears the ₹66.67 discount. On the due date Tanu sends Harsh a cheque for the full ₹10,000, and Harsh meets his acceptance.