Arun and Anand were friends and in need of funds. On 1.1.2015 Arun drew a bill for ~ 2,00,000 for 3 months on Anand. On 4.1.2015 Arun got the bill discounted at 10% p.a. and remitted half of the proceeds to Anand. On the due date, Arun could not remit his share, instead, he accepted Anand’s bill for ~ 1,20,000 on 4.4.2015 for two months. This bill was discounted by Anand at 12% p.a. Out of this, ~ 19,600 was paid to Arun after deducting ~ 400 discounting charges. Due to financial crisis, Arun became insolvent and the bill drawn on him was dishonoured and his estate paid 50%. Days of grace for discounting purposes may be ignored.
Give Journal Entries in the books of Arun and prepare Anand’s Account in Arun’s books and Arun’s Account in the books of Anand.