On 1st January 2006, Rajan drew on Mahesh three bills of exchange in full settlement of...

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On 1st January 2006, Rajan drew on Mahesh three bills of exchange in full settlement of claims, the first for 14,000 at one month, the second for 16,000 at 2 months and the 3rd for 18,000 at 3 months. The bills were duly accepted by Mahesh. The 1st bill was endorsed by Rajan to his creditor Vinod on 3rd Jan.2006. The second bill was discounted on 15th Jan. for 15,900 and the 3rd bill was sent to bank for collection on 4th Feb. All the bills were met on maturity except the 2nd bill which was dishonoured, noting charges being paid 24. Rajan charged 30 for interest from Mahesh and drew on him a 4th bill for 2 months for 16,054. Before maturity Mahesh became insolvent and a first & final dividend 60% received from him. Pass journal entries in the books of both the parties. On 1st January 2006, Rajan drew on Mahesh three bills of exchange in full settlement of claims, the first for 14,000 at one month, the second for 16,000 at 2 months and the 3rd for 18,000 at 3 months. The bills were duly accepted by Mahesh. The 1st bill was endorsed by Rajan to his creditor Vinod on 3rd Jan.2006. The second bill was discounted on 15th Jan. for 15,900 and the 3rd bill was sent to bank for collection on 4th Feb. All the bills were met on maturity except the 2nd bill which was dishonoured, noting charges being paid 24. Rajan charged 30 for interest from Mahesh and drew on him a 4th bill for 2 months for 16,054. Before maturity Mahesh became insolvent and a first & final dividend 60% received from him. Pass journal entries in the books of both the parties.

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Journal entries in the books of Rajan On 1st January 2006 Bank Ac Dr 48000To Mahesh Ac 48000Being th... View the full answer