On Feb. 14, 2017 Rashmi sold good ₹7,500 to Alka. Alka paid ₹500 in cash and for the balance accepted a bill o

Numerical Questions · Q19

Q. On Feb. 14, 2017 Rashmi sold good ₹7,500 to Alka. Alka paid ₹500 in cash and for the balance accepted a bill of exchange drawn upon her by Rashmi payable after two months. On Apr.10, 2017 Alka approached Rashmi to cancel the bill since she was short of funds. She further requested Rashmi to accept ₹2,000 in cash and draw a new bill for the balance including interest ₹500. Rashmi accepted Alka's request and drew a new bill for the amount due payable after 2 months. The bill was accepted by Alka. The new bill was duly met by Alka on maturity. Record the necessary journal entries in the books of Rashmi and Alka and prepared Alka's account in the books of Rashmi's and Rashmi's account in the books of Alka's

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Sale ₹7,500: ₹500 in cash, ₹7,000 by a two-month bill dated 14 Feb 2017 (maturity = Feb 14 + 2 months = Apr 14 + 3 days grace = 17 Apr 2017). On 10 Apr 2017 (before maturity) the bill is cancelled: Alka pays ₹2,000 cash, ₹500 interest is charged, and a fresh two-month bill is drawn for the balance = ₹7,000 − ₹2,000 + ₹500 = ₹5,500 (maturity = Apr 10 + 2 months = Jun 10 + 3 days grace = 13 Jun 2017). The new bill is met on maturity. Each personal account totals ₹15,000.

Books of Rashmi

Date	Particulars	Debit (₹)	Credit (₹)
2017 Feb 14	Alka's A/c Dr.	7,500
	To Sales A/c		7,500
	(Sold goods to Alka on credit)
2017 Feb 14	Cash A/c Dr.	500
	Bills Receivable A/c Dr.	7,000
	To Alka's A/c		7,500
	(Received ₹500 in cash and acceptance for the balance)
2017 Apr 10	Alka's A/c Dr.	7,000
	To Bills Receivable A/c		7,000
	(Old bill cancelled on Alka's request before maturity)
2017 Apr 10	Alka's A/c Dr.	500
	To Interest A/c		500
	(Interest charged on renewal)
2017 Apr 10	Cash A/c Dr.	2,000
	Bills Receivable A/c Dr.	5,500
	To Alka's A/c		7,500
	(Received ₹2,000 in cash and a new acceptance for the balance including interest)
2017 Jun 13	Bank A/c Dr.	5,500
	To Bills Receivable A/c		5,500
	(New bill met by Alka on maturity)

Books of Alka

Date	Particulars	Debit (₹)	Credit (₹)
2017 Feb 14	Purchases A/c Dr.	7,500
	To Rashmi's A/c		7,500
	(Purchased goods from Rashmi on credit)
2017 Feb 14	Rashmi's A/c Dr.	7,500
	To Cash A/c		500
	To Bills Payable A/c		7,000
	(Paid ₹500 in cash and accepted a bill for the balance)
2017 Apr 10	Bills Payable A/c Dr.	7,000
	To Rashmi's A/c		7,000
	(Old bill cancelled before maturity)
2017 Apr 10	Interest A/c Dr.	500
	To Rashmi's A/c		500
	(Interest due to Rashmi on renewal)
2017 Apr 10	Rashmi's A/c Dr.	7,500
	To Cash A/c		2,000
	To Bills Payable A/c		5,500
	(Paid ₹2,000 in cash and accepted a new bill for the balance)
2017 Jun 13	Bills Payable A/c Dr.	5,500
	To Bank A/c		5,500
	(Met the new acceptance on maturity)

Alka's Account (in the books of Rashmi)

|---|---|---|---|---|---|---|---| …

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