On Feb. 14,2006 Rashmi sold good Rs. 7,500 to Alka. Alka paid Rs. 500 in cash and for the bank balance accepted a bill of exchange drawn upon her by Rashmi payable after two months. On Apr. 10,2006 Alka approached Rashmi to cancel the bill since she was short of funds. She further requested Rashmi to accept Rs. 2,000 in cash and draw a new bill for the balance including interest Rs. 500. Rashmi accepted Alks’a request and drew a new bill for the amount due payable after 2 months. The bill was accepted by Alka. The new bill was duly met by Alak on maturity. Record the necessary journal entries in the books of Rashmi and Alka and prepare Alka’s account in the books of Rashmi’s and Rashmi’s account in the books of Alka’s.
