Question 28 Chapter 14 – Class 11 Unimax

Question 28 Chapter 14 – Class 11 Unimax


Question 28 Chapter 14 – Class 11 Unimax

28. X draws on Y, for the mutual accommodation of both a bill for ₹ 2,000 on 1st February at 3 months. X discounts the bill for ₹ 1,960 and remits half the proceed to Y. On maturity, X is unable to send the amount due and therefore Y draws on X a bill for ₹ 2,500 which is duly accepted by X. Y discounts the bills for ₹ 2,400 and remits ₹ 200 to X. Before the bill is due for payment. X become insolvent. Later 30% dividend from his estate.
Give X’s account in Y’s account in X’s books.

The solution of Question 28 Chapter 14 – Class 11 Unimax

Journal for Mr. ‘X’ (Drawer)
Feb. 1Bill receivable A/cDr. 2,000 
 To Y’s A/c   2,000
 (Being acceptance of bill received from Y for mutual accommodation)   
Feb. 1Bank A/cDr. 1,960 
 Discount A/cDr. 40 
 To Bills receivable A/c   2,000
 (Being bill discounted with bank)   
Feb.1Y’s A/cDr. 1,000 
 To Cash A/c  980
 To Discount A/c  20
 (Being half the amount remitted)   
May 4Y’s A/cDr. 2,500 
 To Bills payable A/c   2,500
 (Being acceptance of bill given to Y)    
May 4Cash A/cDr. 200 
 Discount A/cDr. 50 
 To Y’s A/c   250
 (Being cash received from Y and discount allowed)    
Due dateBill payable A/cDr. 2,500 
 To Y’s A/c   2,500
 (Being insolvent & bill not met)    
Before Due dateY’s A/c (1,000+250)Dr. 1,250 
 To cash A/c   375
 To Deficiency A/c   875
 (Being insolvent & only 30% paid to Y)   


Dr.Y’s A/cCr.
Feb. 1To cash A/c 980Feb. 1By Bill receivable A/c 2,000
Feb. 1To Discount A/c 20Mar. 4By Discount A/c 50
May 4To Bill payable A/c 2,500May 4By Cash A/c 200
 To Cash A/c 375 By Bill Payable A/c 2,500
 To Deficiency A/c 875    
   4,750   4,750


Journal for Mr. ‘Y’ (Drawee)
Feb. 1X’s A/cDr. 2,000 
 To Bill payable A/c   2,000
 (Being acceptance of bill given to X for 3 months)   
Feb. 1Cash A/cDr. 980 
 Discount A/cDr. 20 
 To X’s A/c   1,000
 (Being half the amount of bill received from X)   
May 4Bills payable A/cDr. 2,000 
 To Cash A/c  2,000
 (Being bill met on due date)   
May 4Bills receivable A/cDr. 2,500 
 To X’s A/c   2,500
 (Being acceptance of bill received from X)    
May 4Bank A/cDr. 2,400 
 Discount A/cDr. 100 
 To Bills receivable A/c   2,500
 (Being bill discounted with bank)    
May 4X’s A/cDr. 250 
 To Cash A/c   200
 To Discount A/c   50
 (Being cash paid to X)    
Before Due dateX’s A/cDr. 2,500 
 To Bank A/c   250
 (Being bill not met on due date by X)    
Before Due dateCash A/cDr.   375 
 Bad debts A/cDr. 875 
 To X’s (1,000+250) A/c   1,250
 (Being ‘X’ become insolvent and only 30% amount received from him)   


Dr.X’s A/cCr.
Feb. 1To Bills payable A/c 2,000Feb. 1By Bill receivable A/c 23,000
Mar. 4To Discount A/c 50Feb.  1By Bill receivable A/c 23,485
May 4To cash A/c 200Mar. 4By Cash A/c 10,000
 To Bank A/c 2,500 By Bill receivable A/c 13,985
   4,750   4,750

Working Note:

(i) As soon as one party become insolvent after making dishonoured entry it should be found as to how much amount is due by ‘X’ to ‘Y’ for which we should prepare X’s account in Y’s books and Y’s A/c in X’s book. Both will show the same amount with different balance (Dr. or Cr.)

(ii) Discounting charges of second bill have been apportioned in the ratio in which X & Y shared the proceeds of second bill i.e. 1:1 shown as follows:

Total proceeds received of second bill

Amount paid on behalf of partners for 1st bill

Balance (₹ 2,400-2,000) 400, distributed as200200
Ratio which proceeds of second bill shared 1:1  
Discounting charges of second bill to be shared 5050



End of Solution

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