Harry draws a bill on Sejal for ₹ 60,000 on 01.01.2023 for 3 months. Sejal accepts the bill and sends it back to Harry to get it discounted for 56,...

Question

Harry draws a bill on Sejal for ₹ 60,000 on 01.01.2023 for 3 months. Sejal accepts the bill and sends it back to Harry to get it discounted for 56,000. Harry remits 1/4th amount to Sejal. On the due date, Harry was unable to remit his share to Sejal, rather accepts a bill of ₹ 80,000 for a period of 3 months. This bill was discounted by Sejal for 74,600. Sejal after making the payment of first bill sent 3/4th of the amount remaining to Harry. On maturity of the bill, Harry became bankrupt and his estate paying 40 paise in the rupee. Give journal entries in the books of Sejal. Also prepare ledger account of Harry. All workings should form part of the answer. [Sept. 2024, 10 Marks]

Accepted Answer

Option : Correct Option. Solution: In the Books of Sejal Journal Entries | Date / No. | Particulars | L.F. | Debit (₹) | Credit (₹) | | :--- | :--- | :---: | ---: | ---: | | (i) | Harry's A/c
To Bills Payable A/c
(Being bills of exchange accepted and sent to Harry) | | 60,000 |
60,000 | | (ii) | Bank A/c
Discounting charges A/c
To Harry A/c
(Being the amount received from Harry on account of the bill receivable) | | 14,000
1,000 |

15,000 | | (iii) | Bills Receivable A/c
To Harry's A/c
(Being the bill accepted by Harry) | | 80,000 |
80,000 | | (iv) | Bank A/c
Discounting charges A/c
To Bills Receivable A/c
(Being Harry's acceptance discounted with bank) | | 74,600
5,400 |

80,000 | | (v) | Bills Payable A/c
To Bank A/c
(Being the acceptance met on the due date) | | 60,000 |
60,000 | | (vi) | Harry's A/c
To Bank A/c
To Discounting charges A/c (WN 1)
(Being the amount remitted and discounting charges debited to Harry) | | 15,000 |
10,950
4,050 | | (vii) | Harry's A/c
To Bank A/c
(Being Harry's acceptance which was discounted dishonoured due to Harry's Bankruptcy) | | 80,000 |
80,000 | | (viii) | Bank A/c
Bad Debts A/c
To Harry's A/c
(Being amount received from Harry and the Balance being written off as bad debt) | | 24,000
36,000 |

60,000 |
Harry's Account | Particulars | Amt | Particulars | Amt | | :--- | ---: | :--- | ---: | | To Bills Payable A/c | 60,000 | By Bank A/c | 14,000 | | To Bank A/c | 10,950 | By Discounting charges A/c | 1,000 | | To Discounting charges A/c | 4,050 | By Bills Receivable A/c | 80,000 | | To Bank A/c | 80,000 | By Bank A/c | 24,000 | | | | By Bad Debts A/c | 36,000 | | TOTAL | 1,55,000 | TOTAL | 1,55,000 |
Working Notes: WN 1. Share of Harry in discounting charges of 2nd Bill: text{Discounting charges} x text{Amount Due} / text{Discounted Amt of 2nd bill} = 5400 x 55,950^/74,600 = 4,050 [45,000 + 10,950]

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