Question:
On 1st January, 2023, X sold goods to Y for Rs. 50,000. On the same date X drew a bill on Y for Rs. 50,000 due after three months. Y accepted the bill and returned it to X. X retained the bill till the due date, and Y met the bill on due date. Pass journal entries for the above transactions in the books of X.
On 1st January, 2023, X sold goods to Y for Rs. 50,000. On the same date X drew a bill on Y for Rs. 50,000 due after three months. Y accepted the bill and returned it to X. X retained the bill till the due date, and Y met the bill on due date. Pass journal entries for the above transactions in the books of X.
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Bills receivable are treated as assets in the books of the drawer and are honored when paid by the drawee on the due date.
Updated On: Dec 18, 2024
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Solution and Explanation
The following journal entries will be recorded in the books of X:
| \(Date\) | Particulars | Debit (Rs.) | Credit (Rs.) |
|---|---|---|---|
| 1st Jan 2023 | Y’s A/c Dr. To Sales A/c (Being goods sold to Y on credit) | 50,000 | 50,000 |
| 1st Jan 2023 | Bills Receivable A/c Dr. To Y’s A/c (Being bill accepted by Y and retained by X) | 50,000 | 50,000 |
| 1st April 2023 | Cash/Bank A/c Dr. To Bills Receivable A/c (Being bill honored by Y on maturity date) | 50,000 | 50,000 |
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