[ISC] Q 45 Solution Bills of Exchange Class 11 (2022-23)

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A sold goods to B for ₹ 30,000 on 1st January, 2021. A drew upon him a three months bill for the amount. B accepted the bill and retured it to A who discounted the bill @ 10% p.a. with a bank on 4th January. On the due date, the bill is dishonoured by B, the noting charges being ₹ 100. On 4th April, 2021, B makes an offer to A to pay him ₹ 10,000 by current date cheque on account and to settle the balance by agreeing to accept one bill of exchange for ₹ 12,000 at one month, and the other for the balance at three months – the latter including interest @ 8% p.a. for both the bills. B accepts the arrangement. The first bill is met on the due date. But before the maturity of the second bill, B becomes insolvent and a dividend of 50 paise in the rupee is realised from his estate on 4th July, 2021.

Pass Journal entries in respect of the above in the books of A and B.

Solution:-

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