4. Mr. David draws two bills of exchange on 1.1.2016 for 6,000 and 10,000.
The bills of exchange for 6,000 is for two
months while the bill of exchange
for 10,000 is for three months. These bills are
accepted by Mr. Thomas. On
4.3.2016, Mr. Thomas requests Mr. David to renew
the first bill with interest
at 18% p.a. for a period of two months. Mr. David agrees
to this proposal. On
20.3.2016, Mr. Thomas retires the acceptance for
10,000, the interest
rebate i.e. discount being 100. Before the due date of the renewed
bill, Mr.
Thomas becomes insolvent and only 50 paise in a rupee could be recovered
from his estate. You are to give the journal entries in the books of Mr. David.