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June 4 Dr. Dr. 1.925 75 2,000 Aug. 4 Dr. Dr. 4,060 200 4,260 Sept. 4 Dr. 2,060 2,060 Sept. 5 Dr. 336.30 Bank A/C Discount on Bills Alc To Bills Receivable Ac (Being the bill for + 2,000 discounted @ 15% p.a.) DAC Discount Received Alc To RNC (Being the bill for 2 4,000 dishonoured at maturity - nating charges ? 60) DAC To Bank Alc (Being the bill for 2,000 dishonoured at maturity - noting charges ? 60) DAC To Interest A/c (See Note) (Being the interest charged for the extended period) Bills Receivable Ac To DAC (Being a new bill drawn on D for the balance plus interest) D A/C To Bills Receivable AC (Being the bill dishonoured at maturity) Bank Alc Bad Debts AVC To DAC (Being a final dividend of 40% received in full settlement) 336.30 Sept. 5 Dr. 6,456.30 6,456.30 Dec 8 Dr. 6.456.30 6,456.30 ? Dr. Dr. 2,582.52 3.873.78 6,456.30 923 Working Note: Interest for the extended period (ignoring days): 4,060 for 4 months @ 18% p.a. = +243.60 2,060 for 3 months a 18% p.a. - ? 92.70 Total interest payable 336.30 Illustration 18 In the books of A, there was a balance of 13,000 due by B on 31st March, 2017 which was written-off as bad debt in closing of the books on that date. On 12th July, 2017 B paid cash 12,000 in full and final settlement of his dues. Further transactions took place between A and B as follows: 2017 Aug 4 A sold goods to B valued at 25,000 which were paid by cheque 4,000 and a bill of exchange for 21,000 at one month. A discounted the bill of exchange at the bank for 20,900. Sep. 7 B's bill was dishonoured and A was called upon to take it up. This he did by paying noting charges of 100. Sep. 8 B met his obligation for 21,000 with a bill at two months for the same amount paid cash for noting charges on the old bill and interest of 200 on the new bill. Nov. 11 B met his bill by paying cash 11,000 and accepted a fresh bill at two months for 10,400 including interest. Dec. 11 B having become insolvent paid final dividend of 50 paise in the rupee. Show journal entries in the books of A and necessary ledger accounts in the books of B

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