DEPARTMENT OF TECHNICAL EDUCATION

ANDHRA PRADESH
Name : Sreenivasa Rao B.
Designation : Lecturer in CCP
Branch : DCCP
Institute : S.U.V.R&S.R GPW, Ethamukkala
Semester : III
Subject Name : Accountancy-II
Subject Code : CCP 302
Major Topic : Bills of Exchange
Duration : 50 minutes
Sub Topic : Problems on Accommodation Bills.
Teaching Aids : PPT, ANIMATION

CCP302.50 1
Objectives

On completion of this class the student will be able

to understand
 Journal entries in the books of Drawer &
Drawee in Accommodation Bills

CCP302.50 2
Recap

In the previous class, the following points have been

discussed
 Accommodation bills – Meaning
 Mutual accommodation
 Accounting treatment

CCP302.50 3
Problem:
 Chandra draws on Srinivas for the mutual
accommodation of both bills for Rs.4,000 on 1st
November 2003 for 3 months
 Chandra discounts the bill for Rs.3,920 and
remits half the proceeds to Srinivas
 On maturity, Chandra is unable to send the
amount due and therefore srinivas draws on
Chandra a bill for Rs.5,000 which is duly
accepted by Chandra

CCP302.50 4
 Problem contd.
 Srinivas discounts the bill for Rs.4,800 and remits
Rs.400 to Chandra
 Before the bill is due for payment, Chandra
becomes insolvent
 Later 30% dividend is received from his estate.
 Pass necessary entries and give Chandra’s
account in Srinivas books and Srinivas’s account
in Chandra’s books

CCP302.50 5
Journal of Chandra:
Date Particulars L.F. Debit Credit
Rs. Rs.

2003 Bills Receivable Account Dr 4,000

Nov.1st To Srinivas, A/c 4,000
(Being the acceptance of Srinivas received
for the bill)
-do- Bank Account Dr 3,920
Discount Account Dr 80
To Bills Receivable Account 4,000
(Being the bill discounted with the banker)
-do- Srinivas’s Account Dr 2,000
To Bank Account 1,960
To Discount Account 40
(Being half of the proceeds of the bill
remitted to Srinivas)

CCP302.50 6
Journal of Chandra contd.

2004 Srinivas’s Account Dr 5,000

Feb 4th To Bills Payable Account 5,000
(Being the acceptance given to the bill)

-do- Bank account 4,00

Dr 100
Discount Account Dr 500
To Srinivas’s Account
(Being the cash received from Srinivas after
-do- deducting theAccount
Bills Payable amount payable to him) Dr 5,000
To Srinivas’s Account 5,000
(Being the bill discounted on due date)

-do- Srinivas’s Account 2,500

Dr 750
To Bank Account 1750
To Deficiency Account
(Being 30% of the amount of the payable to
Srinivas paid due to insolvency)

CCP302.50 7
 Bills Receivable Account
Dr Cr

Date Particulars Rs Date Particulars Rs

2003 To srinivas a/c 4000 2003 By Bank a/c 3920

Nov 1st Nov.1st By Discount a/c 80

4000 4000

2004 To srinivas a/c 5000 4-2-2004 By srinivas a/c 5000

Feb 4th

5000 5000

CCP302.50 8
 Srinivas Account
Date Particulars Amount Date Particulars Amount

2003 To Bank a/c 1,960 2003 By BR a/c 4,000

Nov.1st To Discount a/c 40 Nov.11th
2004 To BP a/c Feb.4th By Bank a/c 400
Feb.4th To Bal.c/d 5,000 By Discount 100
2,000 a/c
By BP a/c 5,000
---------- ------------
9,500 9,500
----------- ------------
To Bank a/c 750 By Balance 2,500
To Deficiency a/c 1,750 b/d
------------- -------------
2,500 2,500
------------- -------------
- CCP302.50 9
 Journal of Srinivas
Date Particulars L.F. Dr Cr.
Amount Amount
Rs. Rs.

2003 Chandra’s A/c Dr 4,000

Nov.1st To Bills Payable Account 4,000
(Being the bill Accepted)
-do- Bank A/c 1,960
Dr Discount A/c 40
Dr To Chandra’s A/c 2,000
(Being half of the proceeds of the bill received from
Chandra)
2004 Bills payable Account Dr
Feb.4th To Bank Account 4,000
(Being the bill met on due date ) 4,000
-do- Bills Receivable Account Dr 5,000
To Chandra’s A/c 5,000
(Being the acceptance of Chandra received for the
bill)
Bank Account Dr 4,800
Discount Account 200
Dr To Bills Receivable Account CCP302.50 5,00010
(Being the bill discounted with the bankers).
Journal of Srinivas contd.

Chandra’s A/c
Dr 5,000
To Bank Account 5,000
(Being the bill amount paid to bank due
to insolvency of Chandra)
Bank A/c
Dr 750
Bad debts Account 1,750
Dr 2,500
To Chandra’s Account
(Being 30% of the amount receivable
from Chandra received)
Chandra’s Account 500
Dr 400
To Bank Account 100
To Discount Account
(Being the cash remitted to Chandra
after deducting the amount due from him
) (2,500 – 2,000 -100)
CCP302.50 11
CCP-302.50 11
Summary

 Practiced the Accommodation bill with different

accounting treatments like on maturity the Drawer
is unable to pay the amount due to the party.
 Accepting of fresh bill by Drawer
 Becoming insolvent before the bill is due for
payment etc.

CCP302.50 12
CCP-302.50 12
Frequently asked questions

1. What is meant by Mutual Accommodation ?

CCP302.50 13
Assignment

1. Write few lines about Mutual Accomodation.

2. Solve problems on Mutual Accomodation from your
text book

CCP302.50 14