Numerical Questions · Q7
Q.Darshan sold goods for ₹40,000 to Varun on 8.1.2016 and drew upon him a bill of exchange payable after two months. Varun accepted the bill and returned the same to Darshan. On the due date the bill was met by Varun. Record the necessary Journal entries in the books of Darshan and Varun in the following circumstances.
- When the bill was retained by Darshan till the date of its maturity.
- When Darshan immediately discounted the bill @ 6% p.a. with his bank.
- When the bill was endorsed immediately by Darshan in favour of his creditor Suresh.
- When three days before its maturity, the bill was sent by Darshan to his bank for collection.
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Start your 14-day free trial to unlock the full solution →Bill ₹40,000 for 2 months, dated 8 Jan 2016. Maturity = 8 Mar + 3 days of grace = 11 Mar 2016. Discounting (case ii) @6% for the full 2-month term: ₹40,000 × 6% × 2/12 = ₹400, so the bank pays ₹39,600. The four cases differ ONLY in Darshan's books; Varun's entries are the same throughout, and the bill is honoured in every case.
Books of Darshan — (i) Bill retained till maturity
| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
|---|---|---|---|---|
| 2016 Jan 08 | Varun's A/c Dr. | 40,000 | ||
| To Sales A/c | 40,000 | |||
| (Sold goods to Varun on credit) | ||||
| 2016 Jan 08 | Bills Receivable A/c Dr. | 40,000 | ||
| To Varun's A/c | 40,000 | |||
| (Received Varun's acceptance for two months) | ||||
| 2016 Mar 11 | Cash/Bank A/c Dr. | 40,000 | ||
| To Bills Receivable A/c | 40,000 | |||
| (Bill met by Varun on maturity) |
Books of Darshan — (ii) Bill discounted @6% p.a.
| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
|---|---|---|---|---|
| 2016 Jan 08 | Varun's A/c Dr. | 40,000 | ||
| To Sales A/c | 40,000 | |||
| 2016 Jan 08 | Bills Receivable A/c Dr. | 40,000 | ||
| To Varun's A/c | 40,000 | |||
| 2016 Jan 08 | Bank A/c Dr. | 39,600 | ||
| Discount A/c Dr. | 400 | |||
| To Bills Receivable A/c | 40,000 | |||
| (Bill discounted @6% p.a. for 2 months; ₹40,000×6%×2/12 = ₹400) | ||||
| On maturity (11 Mar 2016): No entry — the bill is the bank's property. |
Books of Darshan — (iii) Bill endorsed to creditor Suresh
| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
|---|---|---|---|---|
| 2016 Jan 08 | Varun's A/c Dr. | 40,000 | ||
| To Sales A/c | 40,000 | |||
| 2016 Jan 08 | Bills Receivable A/c Dr. | 40,000 | ||
| To Varun's A/c | 40,000 | |||
| 2016 Jan 08 | Suresh's A/c Dr. | 40,000 | ||
| To Bills Receivable A/c | 40,000 | |||
| (Bill endorsed in favour of creditor Suresh) | ||||
| On maturity (11 Mar 2016): No entry — the bill has passed to Suresh. |
Books of Darshan — (iv) Bill sent for collection three days before maturity
| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
|---|---|---|---|---|
| 2016 Jan 08 | Varun's A/c Dr. | 40,000 | ||
| To Sales A/c | 40,000 | |||
| 2016 Jan 08 | Bills Receivable A/c Dr. | 40,000 | ||
| To Varun's A/c | 40,000 | |||
| 2016 Mar 08 | Bills Sent for Collection A/c Dr. | 40,000 | ||
| To Bills Receivable A/c | 40,000 |
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