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Question: On 1st July, 1962, WiUiams owes Dixon £1,200 and immediately accepts three bills of £400 each due respectively in one, two and four months. The first bill is retained by Dixon and is met in due course; the second is discounted (charges £4) and is met in due course; the third is also discounted (charges £2) and is dishonoured; the notarial charges are 10/-.
New arrangements are immediately made whereby Williams pays cash of £100 and accepts a bill due in two months for the balance of the account with interest at 6 per cent per annum. The bill is retained by Dixon until maturity. On being presented the bill is dishonoured; the notarial charges being 5/-. Williams is shortly afterwards made bankrupt, his trustee paying a first and final dividend of 5/- in the £. Prepare the Ledger Accounts in Dixon's books.
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