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On 1st May, 2017 Merchant & Co. sold goods to AB & Co. valued at ₹ 500 and drew upon them a bill at 3 months for the amount. AB & Co. accepted the draft on presentation. When the bill was about to mature. AB & Co. expressed their inability to meet it, and offered to pay Merchant & Co. ₹ 200 in cash and to accept a fresh bill for the balance plus interest at 6% p.a. for 3 months Merchant & Co. agreed to the proposal and bill was renewed. On maturity, the bill was duly met.Make the entries in the books of both the parties to record the above transactions. |
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Answer» On 1st May, 2017 Merchant & Co. sold goods to AB & Co. valued at ₹ 500 and drew upon them a bill at 3 months for the amount. AB & Co. accepted the draft on presentation. When the bill was about to mature. AB & Co. expressed their inability to meet it, and offered to pay Merchant & Co. ₹ 200 in cash and to accept a fresh bill for the balance plus interest at 6% p.a. for 3 months Merchant & Co. agreed to the proposal and bill was renewed. On maturity, the bill was duly met. Make the entries in the books of both the parties to record the above transactions. |
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