OR Kaveri sold goods to Gauri worth ₹ 48,000. Kaveri draws a bill for two months and Gauri accepted it on the same date.Kaveri discounted the bill with the bank @10% p.a.Bill was dishonoured on the due date and Gauri requested Kaveri to accept ₹ 8,00…

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Q.3 OR Kaveri sold goods to Gauri worth ₹ 48,000. Kaveri draws a bill for two months and Gauri accepted it on the same date. Kaveri discounted the bill with the bank @10% p.a. Bill was dishonoured on the due date and Gauri requested Kaveri to accept ₹ 8,000 and interest in cash on remaining amount at 11% p.a. for 3 months. Kaveri agreed and for the balance Gauri accepted a new bill for 3 months. Gauri became insolvent and only 40% could be recovered from her estate. Prepare Journal Entries in the books of Kaveri.

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Answer: Journal entries in the books of Kaveri (discount ₹ 800, interest ₹ 1,100, new bill ₹ 40,000, bad debts ₹ 24,000). Working notes: Discount = 48,000×10/100×2/12 = ₹\ 800 (bill discounted immediately for its full period of 2 months). Balance after cash payment = 48,000 − 8,000 = ₹ 40,000. Interest = 40,000×11/100×3/12 = ₹\ 1,100 . Amount recovered from Gauri’s estate = 40% of 40,000 = ₹ 16,000; bad debt = ₹ 24,000. Journal of Kaveri No.ParticularsDebit (₹)Credit (₹) 1Gauri’s A/c ...Dr.48,000 To Sales A/c48,000 (Being goods sold to Gauri on credit) 2Bills Receivable A/c ...Dr.48,000 To Gauri’s A/c48,000 (Being Gauri’s acceptance received for 2 months) 3Bank A/c ...Dr.47,200 Discount A/c ...Dr.800 To Bills Receivable A/c48,000 (Being the bill discounted with bank @10% p.a. for 2 months) 4Gauri’s A/c ...Dr.48,000 To Bank A/c48,000 (Being the discounted bill dishonoured on due date and bank paid) 5Gauri’s A/c ...Dr.1,100 To Interest A/c1,100 (Being interest @11% p.a. for 3 months on ₹ 40,000 charged to Gauri) 6Cash A/c ...Dr.9,100 To Gauri’s A/c9,100 (Being ₹ 8,000 and interest ₹ 1,100 received in cash from Gauri) 7Bills Receivable A/c ...Dr.40,000 To Gauri’s A/c40,000 (Being Gauri’s new acceptance for 3 months received for the balance) 8Gauri’s A/c ...Dr.40,000 To Bills Receivable A/c40,000 (Being the new bill dishonoured on Gauri’s insolvency) 9Cash A/c ...Dr.16,000 Bad Debts A/c ...Dr.24,000 To Gauri’s A/c40,000 (Being 40% recovered from Gauri’s estate and the balance written off as bad debt)

OR Kaveri sold goods to Gauri worth ₹ 48,000. Kaveri draws a bill for two months and Gauri accepted it on the same date.Kaveri discounted the bill with the bank @10% p.a.Bill was dishonoured on the due date and Gauri requested Kaveri to accept ₹ 8,00…

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No.	Particulars	Debit (₹)	Credit (₹)
1	Gauri’s A/c ...Dr.	48,000
	To Sales A/c		48,000
	(Being goods sold to Gauri on credit)
2	Bills Receivable A/c ...Dr.	48,000
	To Gauri’s A/c		48,000
	(Being Gauri’s acceptance received for 2 months)
3	Bank A/c ...Dr.	47,200
	Discount A/c ...Dr.	800
	To Bills Receivable A/c		48,000
	(Being the bill discounted with bank @10% p.a. for 2 months)
4	Gauri’s A/c ...Dr.	48,000
	To Bank A/c		48,000
	(Being the discounted bill dishonoured on due date and bank paid)
5	Gauri’s A/c ...Dr.	1,100
	To Interest A/c		1,100
	(Being interest @11% p.a. for 3 months on ₹ 40,000 charged to Gauri)
6	Cash A/c ...Dr.	9,100
	To Gauri’s A/c		9,100
	(Being ₹ 8,000 and interest ₹ 1,100 received in cash from Gauri)
7	Bills Receivable A/c ...Dr.	40,000
	To Gauri’s A/c		40,000
	(Being Gauri’s new acceptance for 3 months received for the balance)
8	Gauri’s A/c ...Dr.	40,000
	To Bills Receivable A/c		40,000
	(Being the new bill dishonoured on Gauri’s insolvency)
9	Cash A/c ...Dr.	16,000
	Bad Debts A/c ...Dr.	24,000
	To Gauri’s A/c		40,000
	(Being 40% recovered from Gauri’s estate and the balance written off as bad debt)