Question

Siddhant sold goods to Sudhir of ₹ 43,800 on 18th March, 2019. Siddhant draws a bill on Sudhir on the same day for ₹ 43,800 for 3 months which was duly accepted by Sudhir. Siddhant discounted the bill on the same day at 8% p.a. The bill was dishonoured on the due date and Sudhir requested Siddhant to accept ₹ 13,800 and interest in cash on remaining amount at 12% p. a. Siddhant agreed and for the balance amount accepted a new bill at 2 months. Before the due date of new bill Sudhir retired the bill by paying ₹ 29,700.

Pass necessary Journal Entries in the books of Siddhant.

Answer 1

In the books of Siddhant

Journal Entries

Working Notes:

1. March 18, Discount = 43,800 × \(\frac{3}{12}\times\frac{8}{100}\) = ₹ 876

2. March 21, calculation of interest balance amount:

I = \(\frac{PRN}{100}\)

= 30,000 × \(\frac{12}{100}\times\frac{2}{12}\) (for 2 months on remaining amount ₹ 30,000)

= ₹ 600

3. Before due date bill was retired by Sudhir by paying ₹ 300 less which is considered as discount and as date is not given, here it is not recorded.