On October, 2024, Samar sells goods to Amar for 25,000 plus IGST @18% and draws two bills of exchange on him; the first bill fort - 15,000 for 2…

CA Foundation · Accounting · RTP · May 2025
On October, 2024, Samar sells goods to Amar for 25,000 plus IGST @18% and draws two bills of exchange on him; the first bill fort - 15,000 for 2 months and second bill for the balance for 3 months. Amar accepts and returns these bills to Samar. Both the bills are sent to the bank for collection on 1st October, 2024. In due course, Samar 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 dishonor of second bill are - 500. Pass the journal entries in the books of Samar along with narration.

Suggested Answer and Working Notes:

Journal Entries in the books of Samar Date Particulars L.F. Dr. ₹ Cr. ₹ 2024 Oct.1 Amar A/c Dr. 29,500 To Sales A/c 25,000 To Output IGST A/c 4,500 (Being the inter-state sale of goods to Amar, charged to IGST @18%) Oct.1 Bills Receivable (No.1) A/c Dr. 15,000 Bills Receivable (No.2) A/c Dr. 14,500 To Amar A/c 29,500 (Being the two bills acceptance - one for 15,000 and the other for 14,500 received) Oct.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) Dec.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) 2025 Jan.4 Amar A/c 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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