Bills of Exchange Book Keeping & Accountancy - Bills of Exchange

The person who accepts the bill treats the bill as ______________

When Acceptor or Drawee does not pay the amount of bill to the holder on the due date it is known as ______________ the bill.

Notary Public is ______________

When a bill is drawn for 2 months after date on 3rd Jan. 2020, its due date will be ______________

There are ______________ parties to bill of exchange.

(a) Stamp
(b) Acceptance
(c) Draft
(d) Amount

(a) Discounting charges
(b) Rebate
(c) Bank charges
(d) Noting charges

(a) Notary public
(b) Drawer
(c) Drawee
(d) Payee

(a) Trade bill
(b) Accommodation bill
(c) After date bill
(d) Demand bill

(a) Retaining
(b) Noting
(c) Discounting
(d) Endorsing

Fees charged by the bank for collection of bill on behalf of holder is ______________

When drawee accepts the bill payable at a particular place only, it is known as ______________

Recording the fact of dishonour of bill is known as ______________

A bill whose due date is calculated from the date of acceptance is known as ______________

A person who draws the bill of exchange is known as ______________

There are three parties to a promissory note.

If a bill is drawn payable ‘on demand’ no grace days are allowed.

Noting charges are to be borne by the drawer.

If a bill is discounted by the holder, no entry is passed in his book when the bill is honoured on the due date.

A bill of exchange must be presented to the acceptor on the due date.

Renewal is requested by the drawee to extend the credit period of the bill.

A bill before acceptance is called Promissory Note.

A bill of exchange need not be dated.

A bill is required to be accepted by Drawer.

In case of bill drawn payable ‘on demand,’ no grace days are allowed.

The amount is not recoverable from Drawee on account of insolvency.

Conversion of Bill of Exchange into its present value.

A person who is in possession of the Bill of Exchange.

Bill of exchange drawn and accepted without any valuable consideration.

Cancellation of the bill on maturity in return for a new bill for an extended period of credit.

What are Bills Payable on Demand?

What is the Legal Due Date?

What do you mean by Rebate?

Who is the Payee of the Bill?

What is the relationship between drawer and drawee?

Jouranlise the following transactions in the books of Aaditya.
a) Bank informed that Surya’s acceptance for ₹ 15,750 sent to bank for collection has been honored and bank charges debited ₹ 150.
b) Asha informs Aditya that Nisha’s acceptance for ₹ 23,000 endorsed to Asha, has been dishonoured. Noting charges paid by Asha amounted to ₹ 330.
c) Bank informed that Jaydeep’s acceptance of ₹ 32,400 which was discounted with bank was dishonoured, bank paid Noting charges ₹ 460.
d) Shrikant’s acceptance of ₹ 19,800 was honoured which was deposited with bank for collection.

Give journal entries the books of Bipin.
1. Sonal’s acceptance for 3 months of ₹ 20,000 was discounted with Bank of India at ₹ 19,750.
2. Brinda’s acceptance of ₹ 14,400 retired one month before the due date at rebate of 12% p.a.
3. Rekha’s acceptance of ₹ 8,500 is endorsed in favour of Gayatri in full settlement of her account ₹ 8,650.
4. Sold goods to Vinaya ₹ 20,000 at 8% Trade Discount. Received half the amount immediately on which 10% Cash Discount was allowed. For the balance a bill was drawn on Vinaya which was accepted by her.

On 3rd July, 2019 Ravi drew a bill of ₹ 12,000 for 90 days after date on Dhruv which was accepted by Dhruv. On 9th July, 2019 Ravi endorsed the bill to Harish in full settlement of his account ₹ 12,750. On the same day Harish discounted the bill with bank for ₹ 11,750. Government declared emergency holiday on the due date and as per the provisions of Negotiable Instruments Act the bill was duly met by Dhruv.
Give journal entries in the books of Ravi, Dhruv and Harish.

Shalini owes ₹ 26,000 to Anand. Anand draws a bill for ₹ 21,000 on Shalini for 3 months period and received the balance by a crossed cheque. The bill was duly accepted and returned to Anand. On the same day Anand endorsed Shalini’s acceptance to Vikram. On the due date Vikram informed Anand that Shalini dishonoured her acceptance and noting charges ₹ 280 were paid. Anand then drew a new bill for 1 month on Shalini including noting charges and interest ₹ 650. On the due date Shalini honoured her acceptance by cheque.
Give journal entries in the books of Anand and prepare Anand’s account in the books of Shalini.

On 15th September, 2019 Kunal purchased goods from Kishorilal for ₹ 38,000 and Kunal gave his acceptance after sight for 60 days on18th September, 2019 for the amount due. Kishorilal deposited the bill into bank for collection on the same day. Kunal honoured his acceptance on the due date. Bank charged ₹ 150 as bank charges.
Give journal entries in the books of Kishorilal and Kunal.

Pankaj drawn a bill on Sanjay for ₹ 25,620 on 1st March, 2020 for 90 days. He discounts the bill on the same day with his back at 10% p.a. Calculate the amount of discount.

Shivam drawn a bill on Ganesh for 21,900 on 15th May, 2019 for 60 days. He discounts the bill on the same day with his Bank at 8% p.a. Calculate the amount of discount.

Rahul draws a bill on Atul for ₹ 15,000 on 1st April, 2019 payable after 4 months. Calculate the amount of discount in the following cases :
i) The bill has been discounted @ 10% p.a. on 1st April, 2019.
ii) The bill has been discounted @ 10% p.a. on 1st June, 2019.

A bill of ₹ 16,000 was drawn by Keshav on Gopal on 12th June 2019 for 2 months, what will be the due date, if all of sudden, the legal due date is declared as an emergency holiday?

Nisha’s acceptance for ₹ 16,850 sent to the bank for the collection was honoured and bank charges debited were ₹ 125. Find out the amount actually received by Drawer.

Jouranlise the following transactions in the books of Mayur.
1. Vishwas renewed his acceptance for ₹ 22,000 by paying ₹ 12,000 in cash and accepting a fresh bill for the balance with interest @12% p.a. for 2 months.
2. honoured our acceptance to Ashwin of ₹ 17,750 by endorsing Hari’s acceptance of ₹ 17,500 in full settlement.
3. Prakash who accepted Mayur’s bill for ₹ 21,000 was declared insolvent and only 25% of the amount could be recovered from his esatae.
4. Bank informed us that Shailaja’s acceptance for ₹ 32,000 sent to bank for collection had been dishonoured and noting charges paid were ₹ 275.

Nishant draws a bill for ₹ 25,000 on Abhinav for 3 months on 17th July, 2019. Nishant discounts the bill with his Bankers at 12.5% p.a. on the same day. On the due date of bill Abhinav requested Nishant to accept a crossed chequee of ₹ 5,800 including ₹ 1,800 for interest and to draw bill for the balance for 3 months. Nishant agrees to this proposal. Before due date of new bill Abhinav retires the bill for ₹ 20,250 one month before the due date.
Pass necessary journal entries in the books of Nishant.

On 18th June, 2019 Rohan sold goods on credit for ₹ 40,000 to Navin. Rohan draws a bill for the amount due for 3 months on the same day. Navin accepted the bill and returned it to Rohan. On 19th June, 2019 Rohan discounted the bill with the bank at 15% p. a. On the due date Navin dishonoured his acceptance and bank paid noting charges ₹ 350. Navin then requested Rohan to renew the bill. Rohan agreed on the condition that Navin should pay interest on balance at 12% p.a. plus noting charges by cheque and should accept a new bill for the balance for 2 months. These arrangements were carried through. But before the due date Navin was declared insolvent. Rohan received 60 paise in a rupee as first and final dividend from the private estate of Navin on 23rd Dec. 2019.
Give journal entires in the books of Navin.

Nisha sold good to Asha worth ₹ 34,000, Asha paid ₹ 10,000 immediately and accepted the bill for the balance ₹ 24,000 at 2 months. Nisha discounted the bill with Bank of Maharashtra after one month at 15% p. a. The bill was dishonoured on the due date and Asha requested Nisha to accept ₹ 4,000 and interest in cash on remaining amount at 11% p.a. for 3 months. Nisha agreed and for the balance Asha accepted a new bill at 3 months. But Asha became insolvent and only 40% could be recovered her estate. Prepare Journal of Nisha.

Amol draws a bill on Atul for ₹ 24,000 on 6th Oct. 2019 for 3 months. Atul accepts the bill on the same date. Amol sends the bill to Bank for collection on 20th Oct. 2019. Before due date Atul finds himself unable to make the payment of bill and request Amol to renew it. Amol agrees to the proposal on condition that Atul should pay ₹ 10,000 in cash along with interest ₹ 800 and accept a new bill for 2 months for the balance. Atul retired the bill on 12th Jan. 2020 by paying ₹ 13,500.Give journal entires in the books of Amol.

Journalise the following transactions in the books of Apoorva.
a) Prashant’s acceptance for 60 days ₹ 12,750 deposited into bank for collection.
b) Apoorva sold goods to Kirti for ₹ 20,000 and received her acceptance for the same amount for 2 months. The bill was endorsed to Rekha.
c) Received 30% of the amount due from the private estate of Mukta who was declared insolvent. Mukta had dishonoured her acceptance of ₹ 23,850 and noting charges paid were ₹ 150.
d) Apoorva renews her acceptance of 36,000 to Anuradha by paying cheque of 6,000 and accepting a new bill for 2 months for balance along with interest @ 14.5% p. a.

Journalise the following transactions of Arvind as on 24th October, 2019.
a) Renewed Sainath’s acceptance of ₹ 18,000 with interest of ₹ 380 for 2 months.
b) Sahil informs Arvind that Meenal’s acceptaance of ₹ 13,000 endorsed to Sahil was dishonoured and noting charges paid ₹ 195.
c) Accepted a bill of ₹ 16,400 at 2 months drawn on Chand and Sons for the amount due to them ₹ 19,000 and balance paid in cash.
d) Bank informed that Vidya’s acceptance of ₹ 14,000 which was discounted was dishououred and bank paid noting charges ₹ 105. Renewed bill on Vidya’s request for 2 months with interest ₹ 295.
e) Nandita retired her acceptance to Arvind of ₹ 13,550 by paying cash ₹ 13,000

Sanjay sold goods of ₹ 45,000 to Govind at 10% Trade discount. Govind paid 1/3rd of the amount immediately at a cash discount of ₹ 1,000 and for the balance accepted a bill for 3 months. Sanjay endorsed the bill to Aadesh on the same day in full settlement of his account ₹ 27,500. On the due date the bill was dishonoured by Govind and noting charges paid by Aadesh ₹ 450. Govind requested Sanjay to renew the bill. Sanjay agreed on condition that Govind should pay ₹ 5,250 immediately along with noting charges and for the balance Govind should accept a new bill for 2 months alosg with interest ₹ 1,500. Govind agreed to these contritions and these arrangements were carried through. Sanjay paid Aadesh balance due to him. On the due date of the new bill Govind dishonoured the bill.
Give journal entries in the books of Sanjay and prepare Sajnay’s account in the books of Govind.

Gautam sold goods of ₹ 40,000 to Harsh on 1st May 2019. For this purpose, Gautam drew a bill on Harsh for 2 months. Harsh accepted the same and returned it to Gautam. On matutity the bill was dishonoured by Harsh. Give journal entries in the books of Gautam and Harsh under the following circumstances :
a) If Gautam retained the bill till maturiry.
b) If Gautam discounted the bill with the bank at 12% p.a. on 1st June, 2019.
c) If Gautam sent the bill to bank for collection on 15th May, 2019.
d) If Gautam endorsed the bill to his creditor Arnav.

Prepare a format of bill of exchange from the following details.
1. Drawer : Kedar Pandit, 22/1, Kalpataru Estate, Pirangut, Pune.
2. Drawee : Gauri Mulay, Vashi, Navi Mumbai.
3. Date of Bill : 14th August, 2019.
4. Date of acceptance : 17th August, 2019.
5. Amount ₹ 38,740

Partners of Neerja Publishing House, Nariman Point, Mumbai, Sameer Gupta, draws a bill of exchange for 1 month on 9th February, 2020 for ₹ 62,000 on Namrata Kokil, Panvel Road, Kharghar, payable to M/s Vidya Traders, Lonavala. The bill was accepted on the same day for 2 months.
From the above details prepare a format of bill of exchange.

Prepare a format bill of exchange from the following details.
Mr. Amol Sane, 42, Gangadham, M. G. Road, Ratnagiri draws a 45 days bill on Mrs. Sagarika Mane, 345, Kumthekar Road, Pune, for ₹ 18,750 on 1st March, 2020 which was accepted on 4th March, 2020 for ₹ 15,000 only, by Mrs. Sagarika Mane.

Anuratha Patil, 37-A ICC Towers, Goregaon, Mumbai drew a bill on 23rd January, 2020 for 57,450 Bill was drawn for 2 months ‘After Sight’ on Shanti Vishwakarma, No. 43, Bhosalenagar, Solapur, payable to Shyamala Kate, Nashik. The bill was accepted on 27th January, 2020.
From the above details prepare the format of bill of exchange.

From the following details prepare a format of bill of exchange.
1. Drawer : Mr. Mukund Desai, No.14, Heritage Heights, Nagpur.
2. Drawee : Mr. Yogesh Tilak, Narayan Peth, Pune.
3. Amount ₹ 30,000.
4. Tenure or term :90 days.
5. Date of Bill : 16th July, 2019.
6. Date of acceptance : 20th July, 2019.
7. Payee : Shravan Dave, Panvel.