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Question -

On Feb. 14, 2017 Rashmi sold good ₹ 7,500 to Alka. Alka paid ₹ 500 in cash and for the bank balance accepted a bill of exchange drawn upon her by Rashmi payable after two months. On 10 Apr, 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.



Answer -

Books of Rashmi

Journal

Date

Particulars

L.F.

Debit ₹

Credit₹

2017

14 Feb

Alka

Dr.

7,500

To Sales A/c

7,500

(Goods tradedto Alka)

14 Feb

Cash A/c

Dr.

500

Bills Receivable A/c

Dr.

7,000

To Alka

7,500

(Cash received ₹ 500 and the bill accepted by Alka)

10 Apr

Alka

Dr.

7,000

To Bills Receivable A/c

7,000

(Alka got the bill cancelled)

10 Apr

Cash A/c

Dr.

2,000

 To Alka

2,000

(Received cash from Alka)

10 Apr

Alka

Dr.

500

To Interest A/c

500

(Interest charged on the amount due from Alka)

10 Apr

Bills Receivable A/c

Dr.

5,500

To Alka

5,500

(Alka’s acceptance payable of two months received)

13 June

Cash A/c

Dr.

5,500

To Bills Receivable A/c

5,500

(Alka’s acceptance met on due date)

Ledger 

Alka’s Account

Dr.

Cr.

Date

Particulars

J.F.

Amount ₹

Date

Particulars

J.F.

Amount ₹

2017

2017

14 Feb

Sales

7,500

14 Feb

Cash

500

10 Apr

Bills Receivable

7,000

14 Feb

Bills Receivable

7,000

10 Apr

Interest

500

10 Apr

Cash

2,000

10 Apr

Bills Receivable

5,500

15,000

15,000

 

Books of Alka

Journal

Date

Particulars

L.F.

Debit ₹

Credit₹

2017

14 Feb

Purchases A/c

Dr.

7,500

To Rashmi

7,500

(Goods purchased from Rahsmi)

14 Feb

Rashmi

Dr.

7,500

To Cash A/c

500

To Bills Payable A/c

7,000

(Cash paid to Rashmi ₹ 500 and a bill for ₹ 7,000

drawn by Rashmi accepted)

10 Apr

Bills Payable A/c

Dr.

7,000

To Rashmi

7,000

(Bill cancelled before maturity)

10 Apr

Rashmi

Dr.

2,000

To Cash A/c

2,000

(Cash paid to Rashmi)

10 Apr

Interest A/c

Dr.

500

To Rashmi

500

(Interest due to Rashmi)

10 Apr

Rashmi

Dr.

5,500

To Bills Payable A/c

5,500

(Rashmi’s acceptance payable after two months

accepted)

13 June

Bills Payable A/c

Dr.

5,500

To Cash A/c

5,500

(The bill met on due date)

Ledger

Rashmi’s Account

Dr.

Cr.

Date

Particulars

J.F.

Amount ₹

Date

Particulars

J.F.

Amount ₹

2017

2017

14 Feb

Cash

500

14 Feb

Purchases

7,500

14 Feb

Bills Payable

7,000

10 Apr

Bills Payable

7,000

10 Apr

Cash

2,000

10 Apr

Interest

500

10 Apr

Bills Payable

5,500

15,000

15,000

 

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