On May 01, 2016 Mohit sends his promissory note of Rs 6000 for 3 months to Rohit. Rohit gets it discounted with his bankers at 18 percent per annum on May 04. On the due ate the bill is dishonoured, the bank paying Rs 10 as noting charges. Rohit agrees to accept Rs 2,130 in cash (including Rs 130 for noting charges and interest) and another promissory note for Rs 4,000 at 2 months. On the due date, Mohit approaches Rohit again and asks for renewal of the bill for a further period of 3 months. Rohit agrees to the request, provided Mohit pays Rs 200 as interest in cash. This last bill is paid on maturity. Draft journal entries in the books of Mohit and Rohit.

Explanation