Q.On Jan 15, 2015, Kartar Sold goods for ₹30,000 to Bhagwan and drew upon him three bills of exchanges of ₹10,000 each payable after one month, two month, and three months respectively. The first bill was retained by Kartar till its maturity. The second bill was endorsed by him in favour of his creditor Ratna and the third bill was discounted by him immediately @ 6% p.a. All the bills were met by Bhagwan. Journalise the above transactions in the books of Kartar and Bhagwan. Also prepare ledger accounts in books of Kartar and Bhagwan.
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Start your 14-day free trial to unlock the full solution →Three bills of ₹10,000 each dated Jan 15, 2015. Maturities: 1 month → Feb 15 + 3 grace = 18 Feb 2015 (retained); 2 months → Mar 15 + 3 grace = 18 Mar 2015 (endorsed to creditor Ratna); 3 months → Apr 15 + 3 grace = 18 Apr 2015 (discounted immediately @6% p.a.). Discount on the third bill = ₹10,000 × 6/100 × 3/12 = ₹150, so the bank pays ₹9,850. No entry is made on maturity for the endorsed and discounted bills. All accounts balance at ₹30,000.
Books of Kartar
| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
|---|---|---|---|---|
| 2015 Jan 15 | Bhagwan's A/c Dr. | 30,000 | ||
| To Sales A/c | 30,000 | |||
| (Sold goods to Bhagwan on credit) | ||||
| 2015 Jan 15 | Bills Receivable A/c Dr. | 30,000 | ||
| To Bhagwan's A/c | 30,000 | |||
| (Received three acceptances of ₹10,000 each payable after 1, 2 and 3 months) | ||||
| 2015 Jan 15 | Ratna's A/c Dr. | 10,000 | ||
| To Bills Receivable A/c | 10,000 | |||
| (Endorsed the second bill in favour of creditor Ratna) | ||||
| 2015 Jan 15 | Bank A/c Dr. | 9,850 | ||
| Discount A/c Dr. | 150 | |||
| To Bills Receivable A/c | 10,000 | |||
| (Third bill discounted with bank @6% p.a. for 3 months, discount ₹150) | ||||
| 2015 Feb 18 | Bank A/c Dr. | 10,000 | ||
| To Bills Receivable A/c | 10,000 | |||
| (First bill met by Bhagwan on maturity) | ||||
| On 18 Mar 2015 (2nd bill) and 18 Apr 2015 (3rd bill): No entry — bills endorsed / discounted. |
Books of Bhagwan
| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
|---|---|---|---|---|
| 2015 Jan 15 | Purchases A/c Dr. | 30,000 | ||
| To Kartar's A/c | 30,000 | |||
| (Purchased goods from Kartar on credit) | ||||
| 2015 Jan 15 | Kartar's A/c Dr. | 30,000 | ||
| To Bills Payable A/c | 30,000 | |||
| (Accepted three drafts of ₹10,000 each payable after 1, 2 and 3 months) | ||||
| 2015 Feb 18 | Bills Payable A/c Dr. | 10,000 | ||
| To Bank A/c | 10,000 | |||
| (Met the first acceptance on maturity) | ||||
| 2015 Mar 18 | Bills Payable A/c Dr. | 10,000 | ||
| To Bank A/c | 10,000 | |||
| (Met the second acceptance on maturity) | ||||
| 2015 Apr 18 | Bills Payable A/c Dr. | 10,000 | ||
| To Bank A/c | 10,000 | |||
| (Met the third acceptance on maturity) |
Bhagwan's Account (in the books of Kartar)
| Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
|---|---|---|---|---|---|---|---|
| 2015 Jan 15 | To Sales A/c | 30,000 | 2015 Jan 15 | By Bills Receivable A/c | 30,000 | ||
| Total | 30,000 | Total | 30,000 |
Bills Receivable Account (in the books of Kartar)
| Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
|---|---|---|---|---|---|---|---| …
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