Practical Problem 07

Practical problem | Q 7 | Page 306

Priyanka owed Meena ` 18,000, Priyanka accepted a bill drawn Meena for the amount at 4 months.

Meena endorsed the same bill to Sagar. Before due date Priyanka approached Meena for renewal of bill.

Meena agreed on condition that ` 6,000 be paid immediately together with interest on the remaining

amount of 8 % p. a. for 3 months and Priyanka should accepte a new bill for the balance amount.

These arrangements were carried through. However, before the due date Priyanka became insolvent

and only 50 % of the amount could be recovered from her estate.

Give Journal Entries in the Books of Meena.

Solution:

Journal Entries In the books of Meena
Date	Particular	L.F	Amount	Amount
1	Bills Receivable A/c …………………………………………………………………………..Dr		18,000
	To Priyanka’s A/c			18,000
	(Being bill Drawn and acceptance is received)

2	Sagar’s A/c …………………………………………………………………………………………Dr		18,000
	To Bills Receivable A/c			18,000
	(Being bill endorsed in favour of sagar)

3	Priyanka’s A/c …………………………………………………………………………………..Dr		18,000
	To Sagar’s A/c			18,000
	(Being Bill Cancelled at the request of Priyanka)

4	Priyanka’s A/c …………………………………………………………………………………..Dr		240
	To Interest A/c			240
	(Being Interst charged for balance amount due)

5	Cash A/c …………………………………………………………………………………………….Dr		6,240
	To Priyanka’s A/c			6,240
	(Being Part payment made along with interest )

6	New Bill Receivable A/c ……………………………………………………………………Dr		12,000
	To Priyanka’s A/c			12,000
	(Being New bill of remaining amount drawn and acceptance Received)

7	Priyanka’s A/c …………………………………………………………………………………..Dr		12,000
	To New Bill Receivable A/c			12,000
	(Being New Bill dishonored for non payment)

8	Cash A/c …………………………………………………………………………………………..Dr		6,000
	Bad debts A/c ………………………………………………………………………………….Dr		6,000
	To Priyanka’s A/c			12,000
	(Being part payment received at the time of insolvency)
	Total		96,480	96,480

Practical Problem 07

Solution:

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