Mr. Bimal accepted a bill for ₹ 30,000 drawn on him by Mr. Aman on 1st August, 2025 for 3 months. This was for the amount which Bimal owed to Aman.…

CA Foundation · Accounting · RTP · September 2026
Mr. Bimal accepted a bill for ₹ 30,000 drawn on him by Mr. Aman on 1st August, 2025 for 3 months. This was for the amount which Bimal owed to Aman. On the same date Mr. Aman got the bill discounted at his bank for ₹ 29,400. On the due date, Bimal approached Aman for renewal of the bill. Mr. Aman agreed on condition that ₹ 6,000 be paid immediately along with interest on the remaining amount at 12% p.a. for 3 months and that for the remaining balance Bimal should accept a new bill for 3 months. These arrangements were carried through. On 31st December, 2025, Bimal became insolvent and his estate paid 40%. You are required to prepare Journal Entries in the books of Mr. Aman

Suggested Answer and Working Notes:

Journal Entries in the Books of Mr. Aman Date Particulars L.F. Dr. Amount (₹) Cr. Amount (₹) 2025 August 1 Bills Receivable A/c 30,000 To Bimal 30,000 (Being the acceptance received from Bimal to settle his account) August 1 Bank A/c 29,400 Discount A/c 600 To Bills Receivable 30,000 (Being the bill discounted for ₹ 9,800 from bank) November 4 Bimal 30,000 To Bank A/c 30,000 (Being the Bimal's acceptance is to be renewed) November 4 Bimal 720 To Interest A/c 720 (Being the interest due from Bimal for 3 months i.e., 8000 x 3/12 × 12% = 240) November 4 Cash A/c 6,720 Bills Receivable A/c 24,000 To Bimal 30,720 (Being amount and acceptance of new bill received from Bimal) December 31 Bimal A/c 24,000 To Bills Receivable A/c 24,000 (Being Bimal became insolvent) December 31 Cash A/c 9,600 Bad debts A/c 14,400 To Bimal 24,000 (Being the amount received and written off on Bimal's insolvency)

Topics: Bills of Exchange and Promissory Notes

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