Rishabh owed ₹ 20,000 to Saurabh. On 1st October, 2023, Rishabh accepted two bills drawn by Saurabh one for ₹ 8,000 and another for ₹ 12,000, the term of both the bills being two months. Rishabh accepts these bills.

On 3rd October, Saurabh endorsed the first bill to his creditor Chintan in full settlement of his account of ₹ 8,250 and on 4th November, he discounts the second bill with his bank @ 6% per annum.

Both the bills are dishonoured on the due dates with noting charges being ₹ 75 and ₹ 100 respectively. On 5th December, Saurabh draws and Rishabh accepts a third bill for 3 months for ₹ 22,500 in liew of the dishonoured bills. On the due date of this bill, Rishabh is declared insolvent and only 60% of the amount could be recovered from his official receiver.

You are required to, in the book Saurabh, prepare the following accounts: (i) Rishabh’s Account; (ii) Chintan’s Account; (iii) Interest Account; and (iv) Bad Debts Account.

Anurag Pathak Changed status to publish October 25, 2023