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A approached his friend B for a loan of Rs 5,000 and the latter, being unable to find the money, agreed to accept a bill drawn on him at 3 months for accommodation. In due course, the bill was drawn, accepted and discounted with the banker. The bank rate of discounting the customer's bill was 6% p.a. On the due date, A remits the required amount to B and the bill was duly met. Pass the Journal entries' in the books of both the parties?
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A approached his friend B for a loan of Rs 5,000 and the latter, being...
Journal Entries in the books of A and B
A's Books:
1. When Bill was drawn:
Bill Receivable A/C Dr. 5,000
To B
(Being the bill drawn on B for Rs 5,000)
2. When Bill was discounted:
Bank A/C Dr. 4,700
Discount A/C Dr. 300
To Bill Receivable A/C
(Being the bill discounted at 6% p.a.)
3. When the bill was paid:
B A/C Dr. 5,000
To Bank A/C
(Being the payment made to B through the bank)
B's Books:
1. When the bill was accepted:
B Dr. 5,000
To Bill Payable
(Being the bill accepted for Rs 5,000)
2. When the bill was discounted:
Bank A/C Dr. 4,700
Discount A/C Dr. 300
To Bill Payable A/C
(Being the bill discounted at 6% p.a.)
3. When the bill was paid:
Bank A/C Dr. 5,000
To A
(Being the payment received from A through the bank)
Explanation:
The given problem involves a transaction where A borrows Rs 5,000 from B and in return, A draws a bill on B for 3 months. B accepts the bill and agrees to pay the amount on maturity. However, he is unable to pay the amount and decides to discount the bill with the bank. The bank discounts the bill at 6% p.a. and pays B Rs 4,700. On the due date, A pays the amount to B, and the bill is duly met.
The journal entries in the books of A and B have been explained above. In A's books, the bill receivable account is debited when the bill is drawn, and it is credited when the payment is received from B through the bank. In B's books, the bill payable account is debited when the bill is accepted, and it is credited when the payment is received from A through the bank.
In conclusion, this transaction involves the use of bills of exchange, which is a commonly used financial instrument in business transactions. The use of bills of exchange helps in providing credit facilities to businesses and also provides a mechanism for the settlement of debts.
A's Books:
1. When Bill was drawn:
Bill Receivable A/C Dr. 5,000
To B
(Being the bill drawn on B for Rs 5,000)
2. When Bill was discounted:
Bank A/C Dr. 4,700
Discount A/C Dr. 300
To Bill Receivable A/C
(Being the bill discounted at 6% p.a.)
3. When the bill was paid:
B A/C Dr. 5,000
To Bank A/C
(Being the payment made to B through the bank)
B's Books:
1. When the bill was accepted:
B Dr. 5,000
To Bill Payable
(Being the bill accepted for Rs 5,000)
2. When the bill was discounted:
Bank A/C Dr. 4,700
Discount A/C Dr. 300
To Bill Payable A/C
(Being the bill discounted at 6% p.a.)
3. When the bill was paid:
Bank A/C Dr. 5,000
To A
(Being the payment received from A through the bank)
Explanation:
The given problem involves a transaction where A borrows Rs 5,000 from B and in return, A draws a bill on B for 3 months. B accepts the bill and agrees to pay the amount on maturity. However, he is unable to pay the amount and decides to discount the bill with the bank. The bank discounts the bill at 6% p.a. and pays B Rs 4,700. On the due date, A pays the amount to B, and the bill is duly met.
The journal entries in the books of A and B have been explained above. In A's books, the bill receivable account is debited when the bill is drawn, and it is credited when the payment is received from B through the bank. In B's books, the bill payable account is debited when the bill is accepted, and it is credited when the payment is received from A through the bank.
In conclusion, this transaction involves the use of bills of exchange, which is a commonly used financial instrument in business transactions. The use of bills of exchange helps in providing credit facilities to businesses and also provides a mechanism for the settlement of debts.
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A approached his friend B for a loan of Rs 5,000 and the latter, being unable to find the money, agreed to accept a bill drawn on him at 3 months for accommodation. In due course, the bill was drawn, accepted and discounted with the banker. The bank rate of discounting the customer's bill was 6% p.a. On the due date, A remits the required amount to B and the bill was duly met. Pass the Journal entries' in the books of both the parties?
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A approached his friend B for a loan of Rs 5,000 and the latter, being unable to find the money, agreed to accept a bill drawn on him at 3 months for accommodation. In due course, the bill was drawn, accepted and discounted with the banker. The bank rate of discounting the customer's bill was 6% p.a. On the due date, A remits the required amount to B and the bill was duly met. Pass the Journal entries' in the books of both the parties? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about A approached his friend B for a loan of Rs 5,000 and the latter, being unable to find the money, agreed to accept a bill drawn on him at 3 months for accommodation. In due course, the bill was drawn, accepted and discounted with the banker. The bank rate of discounting the customer's bill was 6% p.a. On the due date, A remits the required amount to B and the bill was duly met. Pass the Journal entries' in the books of both the parties? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A approached his friend B for a loan of Rs 5,000 and the latter, being unable to find the money, agreed to accept a bill drawn on him at 3 months for accommodation. In due course, the bill was drawn, accepted and discounted with the banker. The bank rate of discounting the customer's bill was 6% p.a. On the due date, A remits the required amount to B and the bill was duly met. Pass the Journal entries' in the books of both the parties?.
A approached his friend B for a loan of Rs 5,000 and the latter, being unable to find the money, agreed to accept a bill drawn on him at 3 months for accommodation. In due course, the bill was drawn, accepted and discounted with the banker. The bank rate of discounting the customer's bill was 6% p.a. On the due date, A remits the required amount to B and the bill was duly met. Pass the Journal entries' in the books of both the parties? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about A approached his friend B for a loan of Rs 5,000 and the latter, being unable to find the money, agreed to accept a bill drawn on him at 3 months for accommodation. In due course, the bill was drawn, accepted and discounted with the banker. The bank rate of discounting the customer's bill was 6% p.a. On the due date, A remits the required amount to B and the bill was duly met. Pass the Journal entries' in the books of both the parties? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A approached his friend B for a loan of Rs 5,000 and the latter, being unable to find the money, agreed to accept a bill drawn on him at 3 months for accommodation. In due course, the bill was drawn, accepted and discounted with the banker. The bank rate of discounting the customer's bill was 6% p.a. On the due date, A remits the required amount to B and the bill was duly met. Pass the Journal entries' in the books of both the parties?.
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A approached his friend B for a loan of Rs 5,000 and the latter, being unable to find the money, agreed to accept a bill drawn on him at 3 months for accommodation. In due course, the bill was drawn, accepted and discounted with the banker. The bank rate of discounting the customer's bill was 6% p.a. On the due date, A remits the required amount to B and the bill was duly met. Pass the Journal entries' in the books of both the parties?, a detailed solution for A approached his friend B for a loan of Rs 5,000 and the latter, being unable to find the money, agreed to accept a bill drawn on him at 3 months for accommodation. In due course, the bill was drawn, accepted and discounted with the banker. The bank rate of discounting the customer's bill was 6% p.a. On the due date, A remits the required amount to B and the bill was duly met. Pass the Journal entries' in the books of both the parties? has been provided alongside types of A approached his friend B for a loan of Rs 5,000 and the latter, being unable to find the money, agreed to accept a bill drawn on him at 3 months for accommodation. In due course, the bill was drawn, accepted and discounted with the banker. The bank rate of discounting the customer's bill was 6% p.a. On the due date, A remits the required amount to B and the bill was duly met. Pass the Journal entries' in the books of both the parties? theory, EduRev gives you an
ample number of questions to practice A approached his friend B for a loan of Rs 5,000 and the latter, being unable to find the money, agreed to accept a bill drawn on him at 3 months for accommodation. In due course, the bill was drawn, accepted and discounted with the banker. The bank rate of discounting the customer's bill was 6% p.a. On the due date, A remits the required amount to B and the bill was duly met. Pass the Journal entries' in the books of both the parties? tests, examples and also practice CA Foundation tests.
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