Bills of Exchange
Q.1. On 1st January, 2023, A sold goods to B for ` 500 and drew upon on him a bill at three
months for the amount. B accepted the draft. On the due date B expressed his inability to
meet the bill and offered ` 300 in cash and to accept a new bill for the balance plus interest
at 6% p.a. for three months. A agreed to the proposal. On the due date the bill was duly
honoured by B. Pass entries in the books of A and B.
Q.2. A draws a bill on his debtors for ` 15,000 on 1st April 2021 for 3 months which is accepted
by the latter. On 10th April 2023, the bill is endorsed by A in favour of C. On due date the
bill is dishonoured and noting charges ` 60 are paid. Give Journal entries in the books of all
the parties.
Q.3. Akbar purchases goods from Suresh worth ` 25,000 on 1st January 2023. He pays ` 15,000,
in cash immediately and sends his acceptance for 3 months for the balance. Suresh gets the
bill discounted with his bank @ of 6% p.a. On the due date bill is dishonoured and noting
charges ` 100 have been paid. Give journal entries in the books of both parties.
Q.4. On 1st July, 2012, Pawan purchased goods valued at ` 7,800 from Tapan and on the same
date he accepted a three months bill for ` 7,700 in full settlement of the account. On the
same date it was endorsed by Tapan to Swpan in full satisfaction of the debt of ` 8,000 due
to him. Swapan immediately discounted the bill for ` 7,500.
On the due date, the bill was dishonoured and the noting charges incurred by the banker
amounted to ` 100. Journalise (excluding narrations) the above transactions in the books of
Tapan and also prepare Tapan’s Account in the books of Pawan and Swapan.
Q.5. A sold goods to the value of ` 4,000 to B, taking a bill at three months thereof. A discounted
the bill at 10% p.a. with his bank. On maturity the bill was returned by the bank dishonoured
with ` 10 as noting charges. B paid ` 1,000 and the noting charges and gave another bill at
three months for ` 3,000 plus 10% interest but before maturity he had become bankrupt and
ultimately paid to his creditors 80 paise in the Rupee. Pass journal enteries in the books of A
and prepare B’s Account in A’s ledger.
Q.6. Journalise the following in the books of Harpal:
(i) Harpal’s acceptance to Govind for ` 2,000 renewed at 3 months together with interest
@ 9%.
(ii) Hari request Harpal to renew his acceptance for ` 1,500 for two months. Harpal agrees
to it provided interest is paid at 10% in cash.
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(iii) Jose informs Harpal that Mike’s acceptance for ` 1,300, endorsed in favour of Jose by
Harpal, has been dishonoured noting charges ` 20. Jose agrees to accept ` 300, in cash
and an acceptance at 3 months together with interest at 12 per cent.
(iv) Harpal’s own acceptance in favour of Jacob for ` 3,100 received from Tarun in
settlement of his debt for the like amount.
(v) Harpal sends Henry’s acceptance for ` 1,600 to Bun to meet his acceptance for the like
amount in favour of Bun.
(vi) Harpal retires his own acceptance for ` 2,000 in favour of Sekiya 20 days before the due
date, the agreed rate of rebate is 9%.
Q.7. On 1st January 2024, Ram drew and Shyam accepted a bill at three months for ` 4,000. On
4th January 2024, Ram discounted the bill at his bank at 15% per annum and remitted half
the proceeds to Shyam. On 1st February, 2024, Shyam drew and Ram accepted a bill at four
months for ` 3,000. On 4th February, 2024 Shyam discounted the bill at 15% per annum with
his bank remitted half the proceeds to Ram. They both agreed to share the discount equally.
At maturity Ram met his acceptance, but Shyam dishonoured bill and Ram had to pay it.
Ram drew and Shyam accepted a new bill at three months for the original bill plus interest at
18% per annum.
On 1st July 2024, Shyam became insolvent and only 50 paise in the rupee were received
from him.
Record the above transaction in Ram’s Journal.
Q.8. Bose and Mitra were in need of funds. On 1st May, 2023, Bose accepted Mitra’s draft for
` 6,000 at 3 months. Mitra got it discounted at 15% and remitted one – third of the proceeds
to Bose.
On the due date Mitra was not able to send the amount. Instead, he accepted Bose’s bill for
` 4,500 at 2 months. Bose got it discounted for ` 4,330. Out of this ` 220 was sent to Mitra.
Early in October Mitra became insolvent. His estate paid 40%.
Give journal entries in the books of both the parties and give Mitra’s account in the books of
Bose.
