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Q: R owed Rs.1,000 to S. On 1st October, 2011, R accepted a bill drawn by S for the amount at 3 months. S got the bill discounted with his bank for Rs.900 on 3rd October, 2011. Before the due date, R approached S for renewal of the bill. S agreed on the conditions that Rs.500 be paid immediately together with interest on the remaining amount at 12% per annum for 3 months and for the balance, R should accept a new bill at three months. These arrangements were carried out. But afterwards, R became insolvent and 40% of the amount could be recovered from his estate.
Pass journal entries (with narration) in the books of S.