1.

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.

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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