Vinod purchased goods for Rs.50,000 from Pramod on 1st February 2021. ...
Journal Entries in Pramod's Books
When Vinod dis-honoured the bill of exchange, Pramod would record the following journal entries depending on the scenario:
(i) Bill Retained till Maturity
- Date: 1st March 2021
- Dr. Bills Receivable A/c 50,000
- Cr. Sales A/c 50,000
- (To record the acceptance of bill by Vinod)
- Date: 1st April 2021
- Dr. Cash A/c 50,000
- Cr. Bills Receivable A/c 50,000
- (To record the receipt of cash upon maturity)
- Date: 1st April 2021
- Dr. Vinod's A/c 50,000
- Cr. Cash A/c 50,000
- (To record dishonour of bill and transfer to Vinod’s account)
(ii) Bill Discounted with Bank
- Date: 1st March 2021
- Dr. Cash A/c 47,000 (50,000 - (50,000 * 6% * 30/360))
- Dr. Discount on Bills A/c 3,000
- Cr. Bills Receivable A/c 50,000
- (To record the discounting of the bill)
- Date: 1st April 2021
- Dr. Vinod's A/c 50,000
- Cr. Cash A/c 50,000
- (To record dishonour of bill and transfer to Vinod’s account)
(iii) Bill Endorsed to Creditor Prasad
- Date: 1st March 2021
- Dr. Prasad’s A/c 50,000
- Cr. Bills Receivable A/c 50,000
- (To record endorsement of bill to Prasad)
- Date: 1st April 2021
- Dr. Prasad’s A/c 50,000
- Cr. Vinod’s A/c 50,000
- (To record dishonour of bill and transfer to Vinod’s account)
(iv) Bill Sent for Collection
- Date: 1st March 2021
- Dr. Bills Receivable A/c 50,000
- Cr. Sales A/c 50,000
- (To record the acceptance of bill by Vinod)
- Date: 1st April 2021
- Dr. Vinod’s A/c 50,000
- Cr. Cash A/c 50,000
- (To record dishonour of bill and transfer to Vinod’s account)
Each scenario reflects the treatment of the dishonoured bill in Pramod's books, ensuring accurate financial records.
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