Certainly! Let's break down the scenario step-by-step to understand the journal entries required in the books of Wagh.
1. Initial Transaction:
- Wagh bought goods worth ₹ 12,000 from Landge.
- For this purchase, Wagh accepted a bill of exchange for 3 months.
2. Endorsement and Dishonour:
- Landge endorsed this bill to Kolhe.
- On the due date, Kolhe presented the bill for payment, but it was dishonoured, and ₹ 50 were paid as noting charges.
3. New Bill:
- Landge drew a new bill on Wagh including the noting charges and an interest amount of ₹ 350.
4. Insolvency and Partial Recovery:
- Before the due date of the new bill, Wagh became insolvent.
- From Wagh's private estate, only ₹ 3,000 was recovered as the first and final dividend.
Let's calculate the deficiency and total journal amounts for Wagh:
### Calculation of Deficiency of Wagh:
- Goods bought: ₹ 12,000
- Noting charges: ₹ 50
- Interest: ₹ 350
- Amount recovered: ₹ 3,000
[tex]\[ \text{Total Amount Owed} = \text{Goods Bought} + \text{Noting Charges} + \text{Interest} \][/tex]
[tex]\[ = ₹ 12,000 + ₹ 50 + ₹ 350 \][/tex]
[tex]\[ = ₹ 12,400 \][/tex]
[tex]\[ \text{Deficiency} = \text{Total Amount Owed} - \text{Amount Recovered} \][/tex]
[tex]\[ = ₹ 12,400 - ₹ 3,000 \][/tex]
[tex]\[ = ₹ 9,400 \][/tex]
### Journal Entries in the Books of Wagh:
1. Record Purchase of Goods:
[tex]\[
\text{Goods Account Debit} \quad ₹ 12,000 \\
\text{To Landge Account Credit} \quad ₹ 12,000
\][/tex]
2. Acceptance of Bill Payable:
[tex]\[
\text{Landge Account Debit} \quad ₹ 12,000 \\
\text{To Bills Payable Account Credit} \quad ₹ 12,000
\][/tex]
3. Dishonour and Noting Charges:
[tex]\[
\text{Bills Payable Account Debit} \quad ₹ 12,000 \\
\text{Noting Charges Account Debit} \quad ₹ 50 \\
\text{To Kolhe Account Credit} \quad ₹ 12,050
\][/tex]
4. New Bill Drawn Including Interest:
[tex]\[
\text{Kolhe Account Debit} \quad ₹ 12,050 \\
\text{Interest Account Debit} \quad ₹ 350 \\
\text{To Bills Payable Account Credit} \quad ₹ 12,400
\][/tex]
5. Partial Recovery:
[tex]\[
\text{Bank Account Debit} \quad ₹ 3,000 \\
\text{Deficiency Account Debit} \quad ₹ 9,400 \\
\text{To Bills Payable Account Credit} \quad ₹ 12,400
\][/tex]
6. Recording the Insolvency:
[tex]\[
\text{Deficiency Account Debit} \quad ₹ 9,400 \\
\text{To Sundry Creditors Account Credit} \quad ₹ 9,400
\][/tex]
Summarizing the total journal entries for Wagh:
- Total amount for all debits and credits in the journal is the sum of all transactions.
Total Journal Amount:
[tex]\[ \text{Goods bought} + \text{Noting charges} + \text{Interest} + \text{Amount recovered} + \text{Deficiency} \][/tex]
[tex]\[ = ₹ 12,000 + ₹ 50 + ₹ 350 + ₹ 3,000 + ₹ 9,400 \][/tex]
[tex]\[ = ₹ 24,800 \][/tex]
So, the detailed breakdown confirms:
- Deficiency of Wagh: ₹ 9,400
- Wagh’s Journal Total: ₹ 24,800
