On 5th January, 2017, Ganesh sold goods to Kartik for ₹60,000. Kartik paid ₹10,000 in cash and balance through bill of exchange. On the same date Kartik accepted the said bill for three months. On 7th January, 2017, Ganesh discounted the bill @ 10% p.a. On the due date the bill w

Question

On 5th January, 2017, Ganesh sold goods to Kartik for ₹60,000. Kartik paid ₹10,000 in cash and balance through bill of exchange. On the same date Kartik accepted the said bill for three months. On 7th January, 2017, Ganesh discounted the bill @ 10% p.a. On the due date the bill was dishonoured and noting charge of ₹50 was settled. Ganesh drew a new bill with interest of ₹200 for two months. Show the necessary Journal entries in the books of Ganesh.

**Or**

Define Bill of Exchange. State two features of Bill of Exchange. (2 + 2)

Accepted Answer

>

> [!TLDR]
> Journalise sale, cash, bill acceptance, discounting (discount Rs 1,250), dishonour with Rs 50 noting charge, and a renewed 2-month bill of Rs 50,250 including Rs 200 interest. (Or) Bill of Exchange = a written unconditional order to pay a certain sum; features include being in writing and an unconditional order.
>
> Working: Bill amount = 60,000 - 10,000 (cash) = 50,000. Discount on discounting = 50,000 x 10% x 3/12 = Rs 1,250, so Bank receives 50,000 - 1,250 = 48,750. On dishonour, Ganesh must repay the bank 50,000 + noting charge 50 = 50,050, charged to Kartik. The renewed bill = 50,050 + interest 200 = 50,250.
>
> Journal of Ganesh:
>
> | Date (2017) | Particulars | Dr (Rs) | Cr (Rs) |
> |---|---|---|---|
> | Jan 5 | Kartik A/c ... Dr | 60,000 | |
> | |   To Sales A/c | | 60,000 |
> | Jan 5 | Cash A/c ... Dr | 10,000 | |
> | |   To Kartik A/c | | 10,000 |
> | Jan 5 | Bills Receivable A/c ... Dr | 50,000 | |
> | |   To Kartik A/c | | 50,000 |
> | Jan 7 | Bank A/c ... Dr | 48,750 | |
> | | Discounting Charges A/c ... Dr | 1,250 | |
> | |   To Bills Receivable A/c | | 50,000 |
> | Due date | Kartik A/c ... Dr | 50,050 | |
> | |   To Bank A/c (bill dishonoured + noting charge 50) | | 50,050 |
> | Due date | Kartik A/c ... Dr | 200 | |
> | |   To Interest A/c | | 200 |
> | Due date | Bills Receivable A/c ... Dr | 50,250 | |
> | |   To Kartik A/c (new 2-month bill) | | 50,250 |
> …

Date	Particulars	L.F.	Debit (₹)	Credit (₹)
2024 Apr 01	Cash A/c Dr.	1	50,000
	To Capital A/c	2		50,000
	(Being business started with cash)

Date	Particulars	Debit (₹)	Credit (₹)
	Advertisement (Free Samples) A/c ..... Dr	XXX
	To Purchases A/c		XXX
	(Being goods distributed as free samples)
…

Type of supply	Tax levied
Intra-state (within a state)	CGST + SGST
Intra-Union Territory	CGST + UTGST
Inter-state (one state to another)	IGST
…

Concept understanding — Journal Entry Format

Journal Entry Format – A First Look

The Everyday Intuition

The Precise Meaning

Why It Matters

The Format (Proforma)

Accounting Treatment – Which Account is Debited and Credited

1. Personal Accounts (accounts of persons, firms, banks, etc.)

2. Real Accounts (assets, property, cash, goods)

3. Nominal Accounts (expenses, losses, incomes, gains)

Worked Example

Date (2017)	Particulars	Dr (Rs)	Cr (Rs)
Jan 5	Kartik A/c ... Dr	60,000
	To Sales A/c		60,000
Jan 5	Cash A/c ... Dr	10,000
	To Kartik A/c		10,000
Jan 5	Bills Receivable A/c ... Dr	50,000
	To Kartik A/c		50,000
Jan 7	Bank A/c ... Dr	48,750
	Discounting Charges A/c ... Dr	1,250
	To Bills Receivable A/c		50,000
Due date	Kartik A/c ... Dr	50,050
	To Bank A/c (bill dishonoured + noting charge 50)		50,050
Due date	Kartik A/c ... Dr	200
	To Interest A/c		200
Due date	Bills Receivable A/c ... Dr	50,250
	To Kartik A/c (new 2-month bill)		50,250
…

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