Question: On 1st January, 1961, Barlow and Ring enter into an agreement to provide liquid funds.
(1) Barlow accepts a 3 months bill payable to Ring for £1,000.
(2) Ring pays £300 to Barlow and accepts a 6 months Bill for £700 payable to Barlow.
Re-printed by courtesy of the Royal Society of Arts (R.S.A.).
Both immediately discount the bills with their bankers. The discount charged to Barlow is £16 and to Ring £18. Barlow pays his bill on the due date but Ring is unable to do so. He arranges for a friend. Wells, to pay the amount to the banker. He accepts a three months draft payable to Wells for £720, and Welis immediately discounts this bill. On the due date. Ring honours the bill. Give the accounts in the books of Barlow and those of Ring.