# 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