A sells goods to B for ~ 1,000 and draws a bill on him for the same amount for 3 months. Before the due date, B requests A to cancel the bill, to accept ~ 300 as part payment and to draw a fresh bill on him for ~ 720 for a further period of 2 months ~ 20 being the interest for the period extended. A agrees to the proposal. The new bill is duly honoured. Pass
Journal Entries and other Party’s Account in the books of both the parties.