Practical Problems, Chapter 9 - Bill Of Exchange (Trade Bill) Question 1: PRACTICAL PROBLEMS Hitesh sold goods for Rs 4,500 to Ashok on 1.1.2010

Practical Problems, Chapter 9 - Bill Of Exchange (Trade Bill)

Question 1:

PRACTICAL PROBLEMS

Hitesh sold goods for Rs 4,500 to Ashok on 1.1.2010 and drew upon him a bill of exchange payable 2 months after sight. Ashok accepted the bill and returned the same to Hitesh. On the due date the bill was met by Ashok.
Record the necessary Journal entries in the books of Hitesh and also prepare Ashok account in his books.
1. When the bill was retained by Hitesh till the date of its maturity.
2. When Hitesh immediately discounted the bill @ 15% p.a. with his bank.
3. When three days before its maturity, the bill was sent by Hitesh to his bank for collection.
4. When the bill was endorsed immediately by Hitesh in favour of his creditor Venkat.

Answer:

Case - I
Books of Hitesh 
Journal Entry

Date
Particulars
L.F. 
Debit
Amount. 
Rs. 
Credit 
Amount 
Rs. 
1.1.2010
Ashok A/c .... Dr. 

4500


To Sales A/c 


4500

[Being Goods Sold to Ashok]








1.1.2010
Bills Receivable A/c .... Dr. 

4500


To Ashok A/c 


4500

[Being the bill is drawn]








4.3.2010
Bank A/c .... Dr. 

4500


To Bills Receivable A/c 


4500

[Being the bill is honoured on due date]




Case - II
Books of Hitesh 
Journal Entry

Date
Particulars
L.F. 
Debit
Amount. 
Rs. 
Credit 
Amount 
Rs. 
1.1.2010
Ashok A/c .... Dr. 

4500


To Sales A/c 


4500

[Being Goods Sold to Ashok]








1.1.2010
Bills Receivable A/c .... Dr. 

4500


To Ashok A/c 


4500

[Being the bill is drawn]








1.1.2010
Bank A/c ... Dr. 

4387


Discount A/c .... Dr. 

113


To Bills Receivable A/c 


4500

[Being the bill is discounted with the bank @ 15% p.a.]




Case - iii

Books of Hitesh 
Journal Entry

Date
Particulars
L.F. 
Debit
Amount. 
Rs. 
Credit 
Amount 
Rs. 
1.1.2010
Ashok A/c .... Dr. 

4500


To Sales A/c 


4500

[Being Goods Sold to Ashok]








1.1.2010
Bills Receivable A/c .... Dr. 

4500


To Ashok A/c 


4500

[Being the bill is drawn]








1.3.2010
Bill Sent for Collection A/c .... Dr. 

4500


To Bills Receivable A/c


4500

[Being the Bill is sent to Bank for collection]








4.3.2010
Bank A/c ... Dr. 

4500


To Bill Sent for Collection A/c 


4500

[Being the bill sent to bank for collection, honoured on due date]




Case - iv

Note: In all the four cases, Ashok’s A/c will be the same.