On 1 st April, 2024, X sells goods to Y for 25,000 plus IGST@18% and draws two bills of exchange on him; the first bill for 15,000 for 2 months and…

CA Foundation · Accounting · RTP · January 2025
On 1 st April, 2024, X sells goods to Y for 25,000 plus IGST@18% and draws two bills of exchange on him; the first bill for 15,000 for 2 months and second bill for the balance for 3 months. Y accepts and returns these bills to X. Both the bills are sent to the bank for collection on 1 st April, 2024. In due course, X receives the information from the bank on the due date of the respective bill that the bill for 15,000 has been duly met and the other bill has been dishonored. Noting charges paid on the dishonour of second bill are - 500. Pass the journal entries along with narrations in the books of X.

Suggested Answer and Working Notes:

Date Particulars L.F Dr. ₹ Cr. ₹ 2024 Apr.1 Y Dr. 29,500 To Sales A/c 25,000 To Output IGST A/c 4,500 (Being the inter -state sale of goods to Y, charged to IGST@18%) Apr, 1 Bills Receivable (No.1) A/c Dr. 15,000 Bills Receivable (No.2) A/c Dr. 14,500 To Y 29,500 (Being the two bills acceptance -one for 15,000 and the other for 14,500 received) Apr.1 Bills sent for collection A/c Dr. 29,500 To Bills Receivable (No.1) A/c 15,000 To Bills Receivable (No.2) A/c 14,500 (Being the Bills sent to bank for collection) July.4 Bank A/c Dr. 15,000 To Bills sent for collection A/c 15,000 (Being the amount duly collected by bank on first bill) Aug.4 Y Dr. 15,000 To Bills sent for collection A/c 14,500 To Bank A/c 500 (Being the second bill dishonored and bank paid 500as noting charges)

Topics: Bills of Exchange and Promissory Notes

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