BILL OF EXCHANGE WITH SOLUTION

Format of the Bill of Exchange


Problem No. 21.

Salman draws a bill on Amithab worth Rs. 90,000 for three months which was accepted by Amithab. On the same date Salman discounted the bill with his bank @ 10 % p.a. On the due date Amithab dishonoured his acceptance. Amithab paid Rs. 40,000/- to Salman and accepted a fresh bill for two months for the balance including interest of Rs. 4000. Amithab became insolvent before the maturity of the bill and 50 paise in a rupee was received at first and final dividend from his estate. Journal entries books of Amithab. [ANS]

Problem No. 22.

On 1st January, 2014 Archana drew a bill for Rs. 6,000 for 2 months periods on Ramya. Ramya duly accepted the bill. On 4th January 2014 Archana discounted the bill with her bank for Rs. 5850. However, on the due date the bill was dishonoured. Ramya agreed to accept a new bill with an interest of Rs. 150 for a period of one month. The bill was duly met on the due date. Give the journal entries in the books of Archana and show Archana’s account in the books of Ramya. [ANS]

Problem No. 23.

Mukesh owes Anil Rs. 40000 for which Anil draws a bill for 2 months on 1st February, 2014. Mukesh accepts it and returns it to Anil. On 4th March, 2014, Mukesh approaches Anil and request him to accept Rs. 10000 in cash and draw a fresh bill for 3 months for the balance plus interest @ 10% p.a. Anil accepts the request and draw a bill accordingly which is accepted by Mukesh. On 1st June 2014 Mukesh retired his acceptance under discount of Rs. 30/-. Pass journal entries in the books of Anil and prepare Anil account in the ledger of Mukesh. [ANS]


Problem No. 24.

Anjali of Nagpur sold goods worth Rs. 25,000 to Rupali of Amaravati. On next day Ruapali paid Rs. 10,000 in cash and accepted two months bill for the balance drawn by Anjali. Anjali discounted the bill at 12% p.a. with her bank. Before due date, Rupali finds herself unable to make payment of the bill; and requests Anjali to renew it. Anjali accepts the proposal on the condition that Rupali should pay Rs. 5,000 in cash and accept new bill for one month along with interest Rs. 200 for the balance. These arrangements were carried through. The new bill was met on due date. Give journal entries in the books of Anjali. [ANS]


Problem No. 25.

Prakash drew a bill for Rs. 4,000 on Anand on 1st May, 2013 for three months. This was for the amount which Anand owed to Prakash. Anand accepts the same and return it to Prakash who discounted at his bank for Rs. 3,900. On 1st Aug, 2013 Anand requested Prakash to renew the bill and Prakash agreed on the condition that Rs. 1,000 is paid immediately and Anand should accept the new bill for 3 months for the balance payable plus interest of Rs. 45. These arrangements were carried through. However, on 1st October, 2013, Anand retired his acceptance for Rs. 3, 035. Pass journal entries in the books of Anand. [Ans]



Problem No. 26. 

Chanda accepted a bill for Rs. 6,000 drawn by Nanda at three months. Nanda got the bill discounted with his bank for Rs. 5,700. Before the due date, Chanda approached Nanda for renewal of the Bill. Nanda agreed on the condition that Rs. 3,000 is paid immediately together with an interest on remaining amount at 18% p.a. for four months and for the balance Chanda should accept a new bill. But afterwards Chanda become insolvent and only 25% of the amount could be recovered from her estate. Pass journal entries in the books of Chanda. [Ans.]  




Problem No. 27. 
Pankaj draws a bill on Anil worth Rs. 8,000 for three months which was accepted by Anil. On the same date Pankaj discounted the bill with his bank @ 10 % p.a. On the due date Anil dishonoured his acceptance. Anil paid Rs. 4,000/- to Pankaj and accepted a fresh bill for two months for the balance including interest of Rs. 40. Anil became insolvent before the maturity of the bill and 50 paise in a rupee was received at first and final dividend from his estate. Give Journal entries in the books of Anil. [Ans.] 


Problem No. 28. 

On 1st January, 1988 Vandana drew a bill for Rs. 6,000 for 2 months periods on Lata. Lata duly accepted the bill. On 4th January 1988 Vandana discounted the bill with her bank for Rs. 5850. However, on the due date the bill was dishonoured. Lata agreed to accept a new bill with an interest of Rs. 100 for a period of one month. The bill was duly met on the due date. Give the journal entries in the books of Vandana and show Vandana’s account in the books of Lata. [Ans. ]



Problem No. 29. 


Mukund owes (be obligated) Prakash Rs. 4000 for which Prakash draws a bill for 2 months on 1st February, 1989. Mukund accepts it and returns it to Prakash. On 4th March, 1989, Mukund approaches Prakash and request him to accept Rs. 1000 in cash and draw a fresh bill for 3 months for the balance plus interest @ 10% p.a. Prakash accepts the request and draw a bill accordingly which is accepted by Mukund. On 1st June 1989 Mukund retired his acceptance under discount of Rs. 30/-. Pass journal entries in the books of Prakash and prepare Prakash account in the ledger of Mukund. [Ans.] 




Problem No. 30


Journalise the following transactions int he books of Kedarnath:

1. Badrinath informs Kedarnath that Aloknath's Acceptance of Rs. 16,000 endorsed to Badrinath has been dishonoured and noting charges amounted to Rs. 500.

2. Somnath renews his acceptance of Rs. 14,400 to Kedarnath by paying cash Rs. 4,400 and accepting a new bill for 2 months for the balance plus interest @ 12% p.a.

3. Vishwanath retired his acceptance for Rs. 10,500 to Kedarnath by paying in cash Rs. 10,250.

4. Recovered only 50% of the amount due from his private estate of Ramnath, who declared as insolvent, against his bill of Rs. 12,500.  [10 MARKS]    [ANS]


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Format of the Bill of Exchange