On 1st September, 2014 Honest Dealers purchased goods valued at ~ 72,000 from Best Manufacturers. They sold these goods to Nice Consumers for ~ 1,00,000 who agreed to accept two bills of exchange of equal value payable on 1st March, 2015 for the invoice amount plus interest at 10% per annum. Honest Dealers could only sell one of the Bills on 30th September, 2014 at a discount of 6% p.a. The other bill was, however, endorsed to the suppliers, Best Manufacturers who agreed to take the Bill on 30th September at a discount of 12% p.a. together with a cheque for the balance.
Show by Journal entries how all these transactions should be recorded in the books of Honest Dealers. State also how these bills would appear in their Balance Sheet at 31st December, 2014, indicating clearly any note that should appear there.