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Question -

On Jan 01, 2016, Shankar purchased goods from Parvati for ₹ 8,000 and immediately drew a promissory note in favour of Parvati payable after 3 months. On the date of maturity of the promissory note, the Government of India declared holiday under the Negotiable Instrument Act 1881. Since, Parvati was unaware about the provision of the law regarding the date of maturity of the bill, she handed over the bill to her lawyer, who duly presented the bill and received the payment. The amount of the bill was handed over by the lawyer to Parvati immediately. Record the necessary Journal entries in the books of Parvati and Shankar.



Answer -

Books of Parvati

 Journal

Date

Particulars

L.F.

Debit

Amount

₹

Credit

Amount

₹

2016

01 Jan

Shankar

Dr.

8,000

To Sales A/c

8,000

(Sold goods to Shankar)

01 Jan

Bills Receivable A/c

Dr.

8,000

To Shankar

8,000

(Shankar sent Promissory Note for

three months)

05 Apr

Cash A/c

Dr.

8,000

To Bills Receivable A/c

8,000

(Cash received for Promissory Note one day after the

Maturity date on account of holiday declared by Govt.)

Books of Shankar

Journal 

Date

Particulars

L.F.

Debit

Amount

₹

Credit

Amount

₹

2016

01 Jan

Purchases A/c

Dr.

8,000

To Parvati

8,000

(Goods purchased from Parvati)

01 Jan

Parvati

Dr.

8,000

To Bills Payable A/c

8,000

(Promissory note for three months sent to Parvati)

05 Apr

Bills Payable A/c

Dr.

8,000

To Cash A/c

8,000

(Cash paid on maturity of promissory note)

 

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