A sells goods for ~ 10,000 to B on 1st January, 2015 and on the same day draws a bill on B at three months for the amount. The bill is dishonoured on the due date, the noting charges paid being ~ 25.
B then accepts a fresh bill for ~ 6,000 at three months by A, and he also pays A in cash ~ 4,205 together with the amount of interest at 12% p.a. for the further credit granted. The bill is duly met on the due date.
Pass journal entries to record these transactions in the books of A.