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Question -

Bansal Traders allow a trade discount of 10% on the list price of the goods purchased from them. Mohan traders, who runs a retail shop made the following purchases from Bansal Traders.

Date Amount
₹
21 Dec, 2016 1,000
26 Dec, 2016 1,200
Dec.18, 2016 2,000
31 Dec, 2016 5,000
For all the purchases Mohan Traders drew promissory note in favour of Bansal Traders payable after 30 days. The promissory note for the sale of Dec. 21, 2016 was retained by Bansal Traders with them till the date of its maturity. The promissory note drawn on 26.12.2016 was discounted by Bansal Traders from their bank at 12% p.a. The promissory note drawn on Dec. 28, 2016 was endorsed by Bansal Traders in favour of their creditor Dream Soaps in full settlement of a purchase amounting to ₹ 1,900. On 25.1.2017 Bansal Traders sent the promissory note drawn on Dec. 31, 2016 to their bank for collection. All the promissory notes were met by Mohan Traders. Record the necessary journal entries for the above transactions in the books of Bansal Traders and Mohan Traders and prepare Mohan Traders account in the books of Bansal Traders and Bansal Traders account in the books of Mohan Traders.



Answer -

Journal Entries in the Books of Bansal Traders

Date

Particulars

L.F.

Debit ₹

Credit₹

2016

21 Dec

Mohan Traders

Dr.

900

To Sales A/c

900

(Goods traded to Mohan Traders list price ₹

1,000 at 10% trade discount)

2016

21 Dec

Bills Receivable A/c

Dr.

900

To Mohan Traders

900

(Promissory note established from Mohan Traders

payable after 30 days)

2016

26 Dec

Mohan Traders

Dr.

1,080

To Sales A/c

1,080

(Goods traded to Mohan Traders list price ₹

1,200 at 10% trade discount)

2016

26 Dec

Bills Receivable A/c

Dr.

1,080

To Mohan Traders

1,080

(Promissory note  received from Mohan Traders)

2016

26 Dec

Bank A/c

Dr.

1,071

Discount A/c

Dr.

9

To Bills Receivable A/c

1,080

(Promissory note discounted from the Bank)

2016

28 Dec

Mohan Traders A/c

Dr.

1,800

To Sales A/c

1,800

(Goods traded to Mohan Traders list price ₹

2,000 at 10% trade discount)

2016

28 Dec

Bills Receivable A/c

Dr.

1,800

To Mohan Traders A/c

1,800

(Promissory note established from Mohan Traders)

2016

28 Dec

Dream Soaps A/c

Dr.

1,900

To Bills Receivable A/c

1,800

To Discount Received A/c

100

(Promissory note of ₹ 1,800 sent to Dream

Soap in full settlement of amount due to him)

2016

31 Dec

Mohan Traders

Dr.

4,500

To Sales A/c

4,500

(Goods traded to Mohan trades list price ₹

5,000 at 10% trade discount)

2016

31 Dec

Bills Receivable A/c

Dr.

4,500

To Mohan Traders

4,500

(Promissory note established from Mohan Traders for 30 days)

2017

23 Jan

Cash A/c

Dr.

900

To Bills Receivable A/c

900

(Promissory note issued on Dec. 21,

2005 was met on maturity)

2017

25 Jan

Bill Sent for collection A/c

Dr.

4,500

To Bills Receivable A/c

4,500

(Promissory note issued on Dec. 31, 2005

sent for collection to bank)

2017

02 Feb

Bank A/c

Dr.

4,500

To Bill Sent for Collection A/c

4,500

(Bank got payment of bill sent for collection

on due date)

In the books of Bansal Traders

Mohan Trader’s Account

Dr.

Cr.

Date

Particulars

J.F.

Amount

₹

Date

Particulars

J.F.

Amount

₹

2016

2016

21 Dec

Sales

900

21 Dec

Bills Receivable

900

26 Dec

Sales

1,080

26 Dec

Bills Receivable

1,080

28 Dec

Sales

1,800

28 Dec

Bills Receivable

1,800

31 Dec

Sales

4,500

31 Dec

Bills Receivable

4,500

8,280

8,280

 

Journal Entries in the Books of Mohan Trader’s

Date

Particulars

L.F.

Debit ₹

Credit₹

2016

21 Dec

Purchases A/c

Dr.

900

To Bansal Traders

900

(Goods purchased from Bansal Trader’s list price ₹

1,000 at 10% trade discount)

2016

21 Dec

Bansal Trader

Dr.

900

To Bills Payable A/c

900

(Promissory note issued Bansal Traders for ₹ 900)

2016

26 Dec

Purchases A/c

Dr.

1,080

To Bansal Traders

1,080

(Goods purchased from Bansal Traders list price ₹

1,200 at 10% Trade discount)

2016

26 Dec

Bansal Traders

Dr.

1,080

To Bills Payable A/c

1,080

(Promissory note established from Bansal Traders)

2016

28 Dec

Purchases A/c

Dr.

1,800

To Bansal Traders

1,800

(Goods purchased from Bansal Traders list price ₹

2,000 at 10% trade discount)

2016

28 Dec

Bansal Traders

Dr.

1,800

To Bills Payable A/c

1,800

(Promissory note issued to Bansal Traders)

2016

31 Dec

Purchases A/c

Dr.

4,500

To Bansal Traders

4,500

(Goods purchased from Bansal Traders of list price ₹

5,000 at 10% trade discount)

2016

31 Dec

Bansal Traders

Dr.

4,500

To Bills Payable A/c

4,500

(Promissory note issued to Bansal Traders)

2017

23 Jan

Bills Payable A/c

Dr.

900

To Cash A/c

900

(The first promissory note discharged on its due date)

2017

28 Jan

Bills Payable A/c

Dr.

1,080

To Bank A/c

1,080

(The second promissory note discharged on its due

date)

2017

30 Jan

Bills Payable A/c

Dr.

1,800

To Cash A/c

1,800

(The third promissory discharged by paying ₹

1,800 to Dream Soaps)

2017

02 Feb

Bills Payable A/c

Dr.

4,500

To Bank A/c

4,500

(The fourth promissory note discharged by paid ₹ 4,500 to Bank)

In the books of Mohan Traders

Bansal Trader’s Account

Dr.

Cr.

Date

Particulars

J.F.

Amount ₹

Date

Particulars

J.F.

Amount ₹

2016

2016

21 Dec

Bills Payable

900

21 Dec

Purchases

900

26 Dec

Bills Payable

1,080

26 Dec

Purchases

1,080

28 Dec

Bills Payable

1,800

28 Dec

Purchases

1,800

31 Dec

Bills Payable

4,500

31 Dec

Purchases

4,500

8,280

8,280

 

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