PANCHAKSHARI’S PROFESSIONAL ACADEMY PVT LTD

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CHAPTER 9
BILL OF EXCHANGE
Introduction:
When goods are sold at credit, then the purchaser gives are document as
a security of future payment it is called as Bills of Exchange. It is a substitute to
immediate cash payment.

Definition:
“A bill of exchange is an instrument in writing containing and unconditional
order signed by the maker directing a certain person to pay a certain amount to or to
the order of a certain person or to the bearer of the instrument”
It is as per negotiable instrument act, 1881.
It is also called as a trade bill it is drawn in cases of a credit transaction.

1. PARTIES TO BILL OF EXCHANGE

1. Drawer: He is a person who draws a bill.
2. Drawee: He is a person on whom the bill is drawn. (When the drawee
accepts the bill he is called as acceptor.)
3. Payee: The person to whom the amount of the bill is payable is called
as payee. He may be the drawer or his agent.
2. Tenor of the bill: It means the period of the bill. Egg. 1 month, 3 months, 50 days.
3. Holder in due course: The person on the payee who is to receive the amount of the
bill on the due is called as “Holder in due course”
4. Due date: The date on which a bill falls due for payment is called as “due date” i.e.
the date when payment of bill is to be made.
If the due date falls on Sunday or any other public holiday like (26 th Jan. 15Aug.) the
payment of the bill is to be made on the next preceding working day.
E.g.: if the due date is 26th January the bill must be paid 25th January if 25th January is
a Sunday then payment must be made 24th January.
5. Grace days: The three days period allowed in addition to the period of the bill are
called as ‘Grace Days’.
In respect of a bill payable on demand or at sight three days of grace are but to
be allowing, because such bill does not have any period.
6. Stamp: A bill of exchange must bear a revenue stamp as per the Stamp
Duty Act but if the bill is payable on demand or at sight, the stamp is
Not required.
7. Acceptance: Every bill of exchange must be accepted by the drawee. The
acceptance is the assent (permission) of the drawee to the bill drawn on him.
a) General acceptance: When the drawee accepts a bill without any condition it is
called as general acceptance or unconditional acceptance.
b) Qualified or special acceptance or conditional acceptance: When the bill is
accepted by the drawee a subject to certain conditional or conditions, it is called as
conditional or qualified acceptance.
8. Honour of a bill: When the acceptor of a bill pays the amount of the
Bill on the due date, the bill is said to be honoured.
9. Dishonour of a bill: when the acceptor refuses to pay the amount of he bill on the
due date, the bill is said to be dishonoured for payment.
It the acceptor refuses to accept the bill, the bill is said to be dishonoured for
acceptance.
10. Discounting of a bill: discounting of a bill means selling the bill to the bank or a
bill- broker for cash in consideration of a small charges known as a discount and that
also before the due date of a bill.
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Definition: proceeds of the Bill: “it is the amount of the bill received by the drawer or
holder of the bill on discounting the bill with the bank before the due date and after
deducting the discount.”
11. Endorsement: Endorsement means transfer of a bill to other party
Or to the creditor by signing the bill on the backside of a bill.
 Types of endorsement:
a) Blank endorsement: It the transfer puts his signature on the backside of the bill
without the name of the transferee is called as “Blank Endorsement”.
b) Special endorsement: The transfer signs the bill on its backside and also writes the
name of the transferee is called as “special Endorsement.
12. Endorser: He is a person who endorses the bill or transfers the bill to other party.
13. Endorsee: He is the person to whom the bill is endorsed or transferred.
14. Noting & protesting: It means recording the fact has dishonoured of a bill on the
face of the bill by” Notary Public”.
Notary Public: He is the Government Officer who records the fact of dishonoured of
a bill of payment.
Noting Charges: It means the fees charges by the notary public for recording the
fact of dishonoured of a bill.
Protesting: protest is formally prepared by the notary public for attesting the
dishonour of the bill. This protest is regarded as a sufficient proof for the dishonour
of the bill. Such protest is prepared only if asked by the drawer.
Protesting is acts of preparing protest incase of dishonoured of a bill.
15. Promissory Note: It is a written promised or instrument, which is unconditional,
signed by the maker, to pay on demand or at a particulars date, to a certain person
or to his order or to the bearer of the instrument, ofcourse a certain amount.
16. Parties to promissory Note:
(i) The maker or promise: He is the person who signs a promissory note and
gives a promise to pay a certain amount to a certain person.
(ii) Payee: He is the person to whom the amount is payable.
Note: a promissory note does not need any acceptance.

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SPECIMEN OF A BILL OF EXCHANGE

BILL OF EXCHANGE

Name and address of the Drawer

STAMP
_____________________

_____________________
_______________________

_________ after date pay me or my order, the sum of Rupees

__________________ (in words) for the value received.

Rs.

sd/-
(Drawer)
To,
Name and address of drawee
________________________
________________________

_____________________
Accepted/-
Sad/- of drawee

_____________________

1. Prepare a bill of exchange for the following:

Drawer: Neeraj Joshi; M.G. Road, Dombivali.
Drawee: Sachin Sharma, 29, Amardeep, Thane
Payee: Amarnath Patil, Nasik.
Period: 60 days
Date of Bill: 15th March, 1995
Accepted on: 20th March, 1995
Amount: Rs.7500

2. Prepare a bill of exchange for the following:

Drawer: Bajirav Patil; Main Road, Kopargaon.
Drawee: GulabRao Mane, Gangapur.
Period: 3 months.
Date of Bill: 17th February, 01
Accepted on: 20th February 01
Amount: Rs.4000

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3. Prepare a bill of exchange for the following:
Drawer: R.R. Rangole, Ratnagiri
Drawee: S.S. Kolhe, Sangali.
Period: 2 month
Date of Bill: 30th April, 2005
Accepted on: 10th May, 2005
Amount: Rs.3000

4. Prepare a bill of exchange for the following:

Drawer: Rasiklal Parekh, Pune
Drawee: Maniklal Doshi, Mumbai
Payee: Jeevanlal Shah, Mumbai
Period: 3 month
Date of Bill: 15th June, 2004
Accepted on: 18th July, 2004 for Rs. 9000 only
Amount: Rs.10, 000

5. Prepare a bill of exchange for the following:

Drawer: S. S. Surve M.G. Road, Mumbai
Drawee: S. G. Ghate, Mumbai
Period: 2 month
Date of Bill: 10th January 90
Accepted on: 10th January 90 as the drawee
Amount: Rs.4000

6. Partner Prabhakar of M/s Sidheshwar Co. 51, Navi Peth, Sholapur drew a Bill
of Exchange of Rs. 2,000/- on 13th December, 1976 on Kumar, M.G. Road,
Bombay – 1 payable to them or to their order two months after date. Kumar
accepted the same for Rs. 1,000/- only on 15th December, 1976.

Prepare Bill of Exchange

7. Prepare a Bill of Exchange from the following particulars.

Drawer: R.K. Samarth, Bhusawal Period : 2 Months

Drawee: J.P. Surana, Jalgaon Date of Bill: 30th April, 1977

Amount: Rs. 30,000 Accepted on: 10th May, 1977

8. On 20th August, 1976 Mr. Ashok Gupta of Delhi, draws bill of exchange
on

Mr. Deepak Desai of Kanpur, for a period of one month for Rs. 3,000 only.
On 25th August, 1976, Mr. Desai accepted the bill.

Prepare the form of the bill.

9. From the following information prepare a Bill of Exchange.

Drawer : Ramlal Gupta, Washim Date of Bill : 15th January,

1977

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Drawee : Jivanlal Chandak, Jalana Accepted on : 25th January,
1977

Payee : Premchand Nanoti, Jalana Amount : Rs. 10,000

Period : 3 months

10. From the following information prepare a Bill of Exchange.

Drawer : Dattajirao Gaikwad, Pune Date of Bill : 25th March, 1979

Drawee : Madhu Shinde, Ambajogai Accepted on : 5th April, 1979

Payee : shrirangrao More, Ambajogai Amount : Rs. 25,000

Period : 2 months

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-Calculate legal Due Date of Bills given:
Sr.no. Date of Bill Period of Sr.No. Date of Bill Period of
Bill Bill
1 28.1.2009 1 month 6 12.6.2009 60 days
2 10.2.2009 2 month 7 30.6.2009 90 days
3 10.3.2009 2 month 8 1.7.2009 120 days
4 19.3.2009 35 days 9 10.8.2009 120 days
5 20.2.2009 45 days 10 12.10.2009 3 months

JOURNAL ENTRIES.
Transaction Drawer Drawee
1. Sale of goods on Drawee A/c Dr. Purchase A/c Dr.
credit To Sales A/c To Drawee’s A/c
2. Acceptance of bill by Bills Receivable A/c Dr Drawer,s A/c Dr.
drawee To Drawee’s A/c To Bills Payable A/c
3. Bill retained and Cash/Bank A/c Dr. Bills Payable A/c Dr.
honoured To Bills Receivable A/c To Cash/Bank A/c
4. Discounting the Bill Cash/Bank A/c Dr.
Discount A/c Dr. No Entry
To Bills Receivable A/c
5. Discounted Bill No Entry Bills Payable A/c Dr.
Honoured To Cash/bank A/c
6. Discounted Bill Drawee’s A/c Dr. Bills Payable Dr.
dishonoured To Bank A/c To Drawer’s A/c
7. Endorsement of bill Endorsee’s A/c Dr. No Entry
To bills Receivable A/c
8. Endorsed bill No Entry Bills Payable A/c Dr.
honoured To Cash/ Bank A/c
9. Endorsed bill Drawee’s A/c Dr. Bills Payable A/c Dr.
dishonoured To Endorsee’s A/c To Drawer A/c
10. Sending the bill to the Bills for collection A/c Dr. No Entry
bank of collection To Bills Receivable A/c
11. Bill sent to the bank Bank A/c Dr. Bills Payable A/c Dr.
for collection Bank Charges A/c Dr. To cash/ Bank A/c
honoured To Bank for collection A/c
12. Bill sent to the bank Drawee’s A/c Dr. Bills Payable A/c Dr.
for collection To Bill sent to the bank for To Drawer A/c
dishonoured collection A/c
13. Retirement of the Bill Cash/Bank A/c Dr. Bills Payable A/c Dr.
Rebate A/c Dr. To Cash/ Bank A/c
To Bills Receivable A/c To Discount A/c
14. Renewal of the Bill
a)Cancellation of first bill Drawee’s A/c Dr. Bills Payable A/c Dr.
To Bills Receivable A/c To Drawer’s A/c
b)Part payment by drawee Cash A/c Dr. Drawer’s A/c Dr.
To Drawee’s A/c To Cash A/c
c)Interest charged to drawee Drawee’s A/c Dr. Interest A/c Dr.
To Interest A/c To Drawee A/c
d)Acceptance of new bill Bills Receivable A/c Dr. Drawee’s A/c Dr.
To Drawee’s A/c To Bills Payable A/c
15. For payment of Noting
charges
a)Payment by drawer Drawee’s A/c Dr. Noting charges A/c Dr.
To Cash/Bank A/c To Drawer’s A/c
b)Payment by bank Drawee’s A/c Dr. Noting charges A/c Dr.
To Bank A/c To Drawer’s A/c

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c)Payment by endorsee Drawee’s A/c Dr. Noting charges A/c Dr.
To Endorsee’s A/c To Drawer’s A/c
16. Insolvency of Drawee
a)Dishonour of Bill Drawee’s A/c Dr. Bills Payable A/c Dr.
To Bills Receivable A/c To Drawer’s A/c
b)Part of the amount due Cash/ Bank A/c Dr. Drawer’s A/c Dr.
recovered in full settlement Bad Debts A/c Dr. To Cash/Bank A/c
from the estate of drawee To Drawee’s A/c To Deficiency A/c

Problem:
Bill kept by Drawer + Properly Honoured:
1. Sold goods of Rs.20, 000 to B.__A draws the bill___ B accepted the bill ___ on due
date ____ B paid the amount of bill.

2. Mr. Anil sold goods of Rs.50, 000 to Mr. Mohan on 10 th Nov. 05. Drawer draws the
bill. On 20th Nov 2005, Mohan accepted the bill on 20 th Nov. 2005. On 31st
December.2005 i.e. on due date Mohan paid the amount.

Bills receivable discounted + honoured:

3. X sold goods of Rs. 80,000 to Y. Y accepted the bill. X discounted the bill for Rs.
77,000. On due date, Y paid the bill amount to bank & bill was honoured.

4. Ashok sold goods of Rs. 150000 to Bhaskar on 01.02.04. Ashok draws the bill on
10.02.04 and Bhaskar accepted it on same date. Ashok discounted the bill for Rs.
146000 on 05.03.04. Due date is 15.04.04. On due date Bhaskar paid Rs. 150000 to
Bank and bill was honoured.

Bills Receivable Endorsed + Honoured:

5. On 1st Oct, 1993, P sold goods of Rs.30, 000/- to Q. Q accepted the bill of Rs.
30,000 on 15th October, 1993. But P was liable to pay Rs. 40,000/- to Z. Thus on 15th
Nov, 1993 P endorsed the bill Z in full Settlement. On 20 th December, 1993 i.e. on due
date Q honoured the bill.

6. Mr. Mahesh sold goods of Rs.1, 50,000 to Rohit on 5 th March, 03. Rohit accepted the
bill on 21st March 2003. Mahesh was liable to pay Rs.1, 50,000/- to Jacky. So Mahesh
endorsed the bill to Jacky on 15thApril 2003. 15th May 2003 is the due date. On this
date Rohit realised the bill amount.

Bill kept by drawer but dishonoured:

7. Meghna draws a bill of Rs.7, 000 on Sarika. Sarika accepted it. On due date Sarika
failed to pay the bill amount. So, bill gets dishonoured. Sarika accepted new bill for
Rs.7000 & properly honoured.

8. Ashwin sold goods of Rs.11, 500 to Amol. Amol accepted it. On due date Amol failed
to pay the bill amount. So Amol accepted new bill for Rs.11, 500 & on due date
properly honoured it.
Bill Discounted but Dishonoured:
Calculation of Discount: Interest Months
Bill amount X ---------- X---------
100 12

- Bill amount Rs. 1, 00,000, Discounted at 12% for 3 months.

Discount = 12 3
100000 X ---- X --- = 3000.
100 12

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- Bill amount Rs. 50,000, discounted at 18% for 6 months.
Discount = 18 6
50000 X ---- X --- = 4500.
100 12

- Bill amount Rs. 1, 00,000, discounted at 24% for 6 months.

Discount = 24 6
100000 X ---- X --- = 12000.
100 12

9. Pravin draws bill of Rs. 1, 00,000 on Shrikant on 1.10.04. Shrikant accepted on

same date for 3 months. On same date i.e. on 1.10.04, Pravin discounted the bill at
15%. On due date, Shrikant failed to pay the amount. Thus 1 st bill dishonoured. On the
same date Shrikant accepted new bill for Rs. 50,000 for 2 months. 2 nd bill properly paid
by Shrikant.

Bill Endorsed but Dishonoured

10. Ram sold goods of Rs. 30,000 to Hari on 1.7.06. On 5.7.2006, Hari accepted bill of
Rs.30, 000 for 3 months. On 8.7.2006, Ram endorsed the bill to Ravi in full settlement
of Rs.32, 000. On due date bill dishonoured. Hari accepted new bill for 2 months &
properly honoured.

11. Sham, draws bill of Rs. 55,000 on Mr. Rohit on 1.1.05, Rohit accepted the bill for
Rs. 55,000 for 2 months. On 5.1.05, Sham endorsed the bill to Ritesh in full settlement
of Rs. 58,000/-. On due date bill dishonoured. Rohit accepted new bill for 3 months &
properly honoured.

Interest on Dishonour of Bill

12. 1.1.06. Raj sold goods of Rs. 20,000 to Anil.
4.1.06. Anil accepted bill for Rs. 20,000 for 2 months.
7.3.06. Anil failed to pay the bill thus it is dishonoured.
10.3.06. Anil accepted new bill for Rs.25, 000 for 1 month.
13.4.06. Anil honoured the bill properly.

Bill discounted – dishonoured – Interest- New bill honoured.

13. X sold goods of Rs.50, 000 on 1.1.06.
10.1.06 Y accepted the bill for 3 months.
15.1.06 X discounted the bill for Rs. 45,000.
13.4.06 Y failed to pay the bill amount thus the bill is dishonoured.
15.4.06 Y accepted new bill for Rs.52, 000 for 1 month.
18.5.06 Y paid the bill amount properly.

14. P sold goods of Rs.30, 000 on 1.1.05 to Q. On 5.1.05 Q accepted the bill for 2
months. On 10.1.05. P discounted the bill for Rs.25, 000. 8.3.05 Q failed to pay the bill
amount, so bill dishonoured. On 15.3.05 Q accepted new bill for Rs. 33,000 for 2
months. On due date bill properly honoured.

Bill Endorsed + Dishonoured + Interest.

15. Viraj sold goods of Rs.10, 000 on 1.1.06 to Sujay. Sugary accepted the bill for 3
months on same date. On 5.1.06, Vijay endorsed the bill to Suresh in full settlement of
Rs. 12,000. On due date, Sujay dishonoured the bill. He accepted new bill for Rs.
14,000 for 1 month. Honoured the bill on due date by Sujay.

16. Minal draws a bill on Usha for Rs. 5,000 at 3 months; Usha accepts the bill &
returns it to Minal. Minal discounts the bill @ 12% p.a. with bank. On due date Usha
unable to pay the bill. Usha requests Minal to renew bill. Minal accepts the proposal on
the condition that Usha should pay Rs.2000 cash & accept a new bill with 10% interest
for 1 month. On due date Usha pay the bill for Rs.3, 015.
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Pass entries in the books of Minal.

Bill kept + Dishonoured + Noting Charges

17. 1.1.05 X sold goods to Y for Rs. 20,000.
1.4.05 Y accepted bill for Rs.20, 000 for 3 months.
4.7.05 Bill dishonoured – X paid noting charges Rs.2, 000.
10.7.05 Y accepted new bill for Rs. 22,000 for 1 month.
13.8.05 Bill honoured by Y.

Bill Discounting + Dishonoured + Noting Charges

18. Ram sold goods of Rs.1, 000 to Sham on 1.4.06, Sham accepted bill on 5.4.06 for
1 month. 5.4.06 Ram discounted bill for Rs.9, 50. On 8.5.06 bill dishonoured. Bank
paid noting charges Rs. 100. Sham paid noting charges in cash to Ram & accepted new
bill for balance for 2 months. On due date bill honored.

Bill Endorsed + Dishonoured + Noting Charges

19. On 10/2/04 Sunil sold goods to Pundit for Rs.55, 000. On 15/2/04 Pundit accepted
the bill for Rs.20, 000 for 2 months. On 18/4/04 bill dishonoured. Sunil paid noting
charges Rs.150. On 25/4/04 Pundit accepted new bill for Rs.20, 150 for 1 month. On
due date bill honoured.

20. Mahindra sold goods to Ravindra for Rs.11, 000 on 01/10/02. On 05/10/02
Ravindra accepted bill for Rs.11, 000 for 1 month. On 6/10/02 Ravindra discounted the
bill for Rs.10, 000. On 08/11/02 bill dishonoured. Bank paid noting charges Rs.90.
Ravindra paid noting charges in cash to Mahindra & accepted new bill for Rs.11,000/-
and properly honoured.

22. Soham sold goods of Rs.25, 000/- to Aryan on 10/04/03. On 15/04/03 Aryan
accepted the bill for Rs.25, 000 for 2 months. Soham endorsed the bill to Ishan against
Rs. 27,000/-. On due date bill dishonoured. Ishan paid noting charges Rs.200/-. Aryan
accepted new bill for total amount on 22/03/03.

23. Journalise the following transaction in the books of Kailash.

(a) Sandeep informs Kailash that Vilas’s acceptance Rs.8, 000 endorsed to Sandeep has
been dishonoured. Noting charges amounted to Rs.200.
(b) Kalpana renews her acceptance to Kailash for Rs.7, 500 by paying Rs.3, 500 in cash &
accepting a fresh bill for the balance plus interest at 10% p.a. for 3 months.
(c) Uma retired her acceptance to Kailash for Rs.3, 000 by paying Rs.2, 900 in cash.
(d) Kailash sent a bill of Anita for Rs.6, 000 to bank for collection but bank informed
that the bills has been dishonoured.

24. Journalise the following transactions in the books of Rahul.

(e) Pradeep informed Rahul, that Vijay’s acceptance for Rs.1, 000 endorsed to
Pradeep has been dishonoured. Noting Charges amounted Rs.50.
(f) Nilesh renews his acceptance to Rahul for Rs.600 by paying Rs.200 in cash &
accepting a fresh bill for balance plus interest at 12% p.a. for 3 months.
(g) Prashant’s acceptance to Rahul for Rs.3, 000 retired one month before due
date at a discount of 12% p.a.
(h) Bank informs Rahul at to dishonour of Aviraj’s acceptance for Rs.1000 to
Rahul discounted with the bank. Noting charges are Rs.20/-.

25. Wagh bought goods from Landge for Rs.12, 000. On the same date Wagh accepted
3 months bill which Landge endorsed to Kolhe. On the due date Kolhe informed Landge
that the bill was dishonoured & Rs.50 was paid for noting charges. Landge then drew a
new bill on Wagh including noting charges & interest Rs.350. Before the due date,
Wagh becomes insolvent & only Rs.3, 000 was recovered from his private estate as
first & final dividend. Give journal entries in the books of Wagh.
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26.Prashant drew a bill on Rohit worth Rs.8, 000 for 3 months, which was accepted by
Rohit. On the same date Prashant discounted the bill with his bank @ 10% p.a. On due
date Rohit dishonoured his acceptance. Rohit paid Rs.4000 to Prashant & accepted a
fresh bill for two months for balance including interest of Rs.40.
Rohit became insolvent before the due date of the bill & 50 paise in a rupee were
received as first & final dividend from his estate. Pass journal entries in the books of
Prashant.

27. Usha purchased goods from Shobha on credit for Rs.5000 & accepted a bill drawn by
Shobha for 4 months. Before the due date, Usha approached Shobha with a request to
renew the bill. Shobha agreed but with the condition that Usha should pay Rs.3000 with
interest of Rs.60 accept a new bill for the balance due. These arrangements were duly
carried through. The new bill was met on due date. Pass journal entries in the books of
Shobha.

28. Mr. Amol draws a bill on Mr. Atul for Rs.14, 000 at 3 months. Atul accepts the bill.
The bill is sent to bank for collection on maturity. Atul finds him unable to make payment
of the bill & requests Amol to renew it. Amol accepts the proposal on the condition that
Atul should pay Rs.7000 in cash along with interest of Rs.100 & accept a new bill at one
month for the balance. These arrangements were carried through. Afterwards Atul
retired the bill by paying Rs.6950/-. Give journal entries & Atul’s A/c in the books of
Amol.

29. Malti drew on Priti, a bill for Rs.12, 000 at 3 months & Priti accepted it. On the same
date, Malti discounted the bill with her bank at 10% p.a. On the due date, Priti
dishonoured her acceptance. Priti paid Rs.4000 to Malti & accepted a fresh bill at two
months for the balance including interest of Rs.200. Before due date of this fresh bill,
Priti became insolvent & only 50 paise in a rupee was received as first & final dividend
from her estate. Pass necessary journal entries in the books of Malti.

30. Rahul sold goods for Rs.7000 to Sudhir, accepted a bill of Rs.7000 drawn by Rahul
at 3 months. Rahul got the bill discounted with bank at 12% p.a. Before due date Sudhir
approached Rahul renewal of the bill. Rahul agreed on the condition that Rs.4000 is paid
immediately & for the balance due he should accept a new bill for bill for 3 months
together with interest of Rs.150. These arrangements were carried through. Afterwards
Sudhir retired the bill by paying Rs.3100. Pass journal entries in the books of Rahul &
show Rahul A/c in the books of Sudhir.

31. X draws a bill on Y for Rs.500 on 1st Jan., 2002 for a term of 3 months. Y
accepts the bill on the same date & returns it to X.Pass necessary journal entries
in the books of X & Y if the bills are:

(a) Retained by X with himself; or

(b) Sent to the bank for collection on 2.1.02 or
(c) Endorsed to Z, on 3.1.02 or
(d) Discounted with his bankers at a discount of Rs.10 on 4.1.02 & the bill is
(i) honoured by Y on due date; (ii) bill is dishonored by Y on due date. (I)
Honoured by Y on due date ;( In the above example X is drawer & Y is acceptor.
Term of the bill is 3 months) Due date is 4th April 2002 i.e. 3 months + 3 grace
days from 1st January, 2002.

32. Journalise the following Bill Transactions:

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(a) Ashok receives acceptance of a bill of Rs.500 from Bhaskar. Ashok sends the
bill to his bank for collection. On due date the bank informs Ashok the honor
of the bill (Entries in the books of Ashok & Bhaskar)
(b) Chandulal draws a bill of Rs.600 on Dhaniram. After receiving acceptance
Chandulal endorse the bill to Fulchand. The bill is met on due date by giving
a cheque.(Entries in the books of Chandulal,Dhaniram & Fulchand)
(c) Deshpande drew a bill on Kulkarni for Rs.2000. on receiving the acceptance
from Kulkarni; Deshpande endorsed the bill to Joshi. The bill is then
discounted with the bankers by Joshi for Rs.1, 950. On due date the bill is
honoured by Kulkarni. (Entries in the books of Deshpande, Kulkarni & Joshi)

33. On 1st January, 2004 X draws a bill on Y for Rs.1, 200 for a term of 3
months after date. Y accepts the bill on 3rd January, 2004 & returns it to X. On
4th January, 2004 & X endorese the bill to Z. on the same date, Z endorsed the
bill to W. On 4th February, 2004 W discounts the bill with his bankers @ 12%
p.a. On due date, Y dishonored the bill. Pass the entries in the books of X, Y, Z &
W presuming that the bank pays noting charges Rs.20.

34. Mahendra sold goods to Ravindra for Rs.6, 000. Ravindra accepted
Mahendra’s bill for Rs.6000 payable after three months. After a month Mahendra
discounted the bill with his bank at 10% per annum.

On due date Ravindra dishonoured his acceptance. Ravindra paid Rs.3, 000 to
Mahendra & accepted a fresh bill for 3 months for the balance including interest
@ 8% per annum. Before the maturity of the bill Ravindra became insolvent &
50 paise in a rupee were received from Ravindra as first & final dividend from his
estate.Pass journal entries in the books of Mahendra.

35. On 1st January 2005 Vandana draws a bill for Rs.6, 000 for 2 months period
on Lata. Lata duly accepted the bill. On 4th January, 2005 Vandana discounted
the bill with her bank for Rs.5, 850. However, on due date the bill was
dishonored. Lata had agreed to accept a new bill with interest of Rs.100, for one
month period. This bill was duly met on the due date. Give journal entries in the
books of Vandana & show Vandana’s A/c in the books of Lata.

36. Abhay draws a bill on Ajay for Rs.1, 400 at 3 months. Ajay accepts the bill
& returns it to Abhay. The bill is sent to bank for collection. On maturity Ajay
finds he unable to make payment of the bill & requests Abhay to renew it. Abhay
accepts the proposal on the condition that Ajay should pay Rs.700 in cash along
with noting charges Rs.10 & draws a new bill at 1 month for the balance. These
arrangements were carried through. Give journal entries & Ajay’s account in the
books of Abhay.

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37. Shailesh accepted a bill of Rs.4, 000 drawn by Kailash at 3 months. Kailash
got the bill discounted with his bank for Rs.3, 900. Before the due date Shailesh
approached Kailash for renewal of the bill. It was agreed to pay Rs.3, 000
immediately together with interest on the remaining amount at 10% p.a. for 3
months & for the balance Shailesh accepted a new bill for 3 months. These
arrangements were carried through. But afterwards Shailesh became insolvent &
only 35% of the amount could be recovered from his estate.Pass necessary
journal entries in the books of Shailesh & Kailash.

38. On 1st January, 2004 Vimal draws a bill for Rs.3, 000 for 2 months period
on Malati. Malati duly accepted the bill. On 4th January, 2004 Vimal discounted
the bill with her bank for Rs.2, 925. However, on due date Malati was unable to
honour the bill. She requested Vimal to draw a fresh bill for the amount plus Rs.
50 interest. Vimal did accordingly. This bill was duly met on the due date. Give
journal entries in the books of Vimal & show Vimal’s account in the books of
Malati.

39. Enter the following transactions in the journal of Mr. Shah.2003

June 1 Shah drew a bill on Diwakar for Rs.600 at one month, which
Diwakar accepted on the same date.

June 2 Patel drew a bill at two months for Rs.900 on Shah.

June 4 Shah accepted the above bill.

June 4 Shah discounted Diwakar’s bill with the Bank for Rs.598.

June 4 Diwakar dishonoured the bill by non-payment & noting charges

were paid by bank Rs.5.

Aug.5 Shah renewed Patel’s bill by paying Patel Rs.100 in cash &
accepting a new bill for Rs.810. The interest Rs. 10 is included in
the new bill.

Sept. 7 Shah retired the renewed bill by paying Rs.805 in full settlement.

40. Mr. Sinha draws a bill on 1st January 2009 on Mr. Mane for Rs.36000/- for 4
months period. Mane accepts the bill on 2nd Jan. 2009 & returns it to Sinha.
Sinha discounts the bill @ 8% p.a. Before due date Mane requests Sinha to
accept Rs.24000/- in cash & draws a second bill for the balance. Sinha draws a
new bill for the balance plus interest @ 12% p.a. for two months. On 4th May as
per the request. The bill is sent to the Bank for collection & honoured on due
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date. Pass journal entries in the books of Mr. Sinha & show Sinha’s A/c. in the
books of Mr. Mane.

41. On 10th April, 2008 Suhas drew a bill for Rs.8000/- on Mahesh payable after
2 months. On 10th June, 2008 Mahesh request to Suhas that he was unable to
honour the bill & asked for renewal of the bill. Suhas agreed on condition that
Rs.2000/- should be paid immediately & new bill will be drawn for further 2
months together with interest of Rs.300/- New bill was duly honoured. Pass
Journal entries in the books of both the parties.

42. Ms. Sunita purchases goods from Mr. Bohra on 1st April, 2008 at Rs. 12000.
Sunita accepts a bill for 2 months drawn by Bohra for the same amount on same
day. Bohra discounts the bill with the bank for Rs.11700/- on 2nd April on due
date the bill is dishonoured, noting charges are Rs. 20. Sunita pays Rs.6000/- in
cash with noting charges. A fresh bill is accepted by her for the balance including
interest Rs.150/- for two months. The new bill is honoured on due date. Pass
Journal entries in the books of both the parties.

43. Journalise the following transactions in the books of Jyoti

A) Bharti informed Jyoti that Saraswatis acceptance endorsed to Bharti for

Rs.8500/- has been dishonoured & noting charges amounted to Rs.150/-

B) Arti renews her acceptance to Jyoti for Rs.20000 by paying half the amount of
bill in cash together with interest at 10% p.a. on balance due & accepting a fresh
bill at 3 months

C) Swati who had given an acceptance to Jyoti for Rs.18000/- declared insolvent
& could pay only 40% of the amount due.

D) Malti’s acceptance to Jyoti for Rs.5750/- endorsed to Bhanumati in full

settlement of her account for Rs.6000/-

44. Journalise the following transactions in the books of Suman.

A) Snehal informs Suman that Manisha’s acceptance for Rs.16000/- endorsed to

Snehal has been dishonoured. Noting charges amounted to Rs.400/-.

B) Deepali renews her acceptance to Suman for Rs.15000/- by paying Rs.7000/-

in cash accepting fresh bill for the balance plus interest @ 10% p.a. for 3
months.

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PANCHAKSHARI’S PROFESSIONAL ACADEMY PVT LTD
(Your Lifelong Knowledge Partner…)
C) Umesh retired his acceptance to Suman for Rs.6000/- by paying Rs.5800/- in
cash.

D) Suman sent a bill of Ramesh for Rs.12000/- to Bank for collection. But bank
informed that the bill has been dishonoured by Ramesh.

45. Jaya draws 4 Bills on Omkar of Rs. 1000, Rs.2000, Rs.3000, and Rs.4000
respectively. Bills are drawn on 1st jan, 2009, for 1 months, three months, and
four months respectively. The first bill is retained by Jay upto the due date. The
second bill is discounted with the bank for Rs.1950 on the same date. The third
bill is endorsed to Shivani on 3rd Jan and fourth bill is sent to bank for collection
on 3rd Jan. Pass journal entries in the books of both parties, assuming all the bill
are honoured.

46. Mr. Ramesh sold goods to Ms. Kirti worth Rs.8000 on 5th jan, 2008. For this
Ramesh drew four bills on the same day for Rs.2000 each for the period of
1,2,3, and 4 months respectively. Kirti accepted all the bills and returned them
to Ramesh.

The first bill is retained by Ramesh till due date, Second bill is discounted
with the bank on 8th Jan for Rs.1900. Third bill is endorsed to Arvind on 15th Jan.
Forth bill is sent to bank for collection on 10th Feb 2008. Kirti dishonoured all the
bills, for each Rs. 10 is incurred as the noting charges. Pass journal entries in
the books of both the parties.

47. On the 1st Jan, 2009, Mr. Godse draws four bills for Rs.2500, Rs.3000,
Rs.3500 and Rs.4000 for the period of 1,2,3, and 4 months respectively. The
first bill is retained by Godse, drawn on Prabhu, who provides money on due
date. The second bill is discounted with the bank on 4th Feb at a discount of 10%
p.a. This bill is dishonoured by Ramdas, the drawee. The third bill is drawn on
Pradip. This is endorsed to Trivedi on 5th Jan. This bill is honoured on due date.
On 5th jan. the fourth bill is sent to bank for collection. It is honoured by Sinha
on due date. Bank charges Rs.50.

Pass journal entries in the books of Mr.Godse, Mr.Prabhu, mr.Ramdas,

Mr.Pradip, Mr.Sinha.

48. Sharma draws a bill on Varma for Rs.5000 at 3 months. On 1st Aug, 2008
Varma accepts it and returns it to Sharma. The bill is discounted by Sharma for
Rs.4925 with his bank on due date Varma finds himself unable to pay the bill
and request Sharma to renew it, Sharma accepts the rewuest and draws a new
bill at one month for Rs.5050 including interest. Sharma deposits the new bill
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(Your Lifelong Knowledge Partner…)
with his bank for collection on due date. Varma honours the bill. Give journal
entries and shows Varma,s A/c in the books of Sharma.

(Total of the books of Sharma Rs. 30200, Total of Varme,s A/c Rs.10050)

49.Journalise the following transactions in the books of mr. Athavale:

a. Keshav renews his acceptance for Rs. 700 by paying Rs.350 (Rs.30 for
interest)
And by ging a bill for Rs.350 for a further period of 2 months on 1st jan
2009.

b. Mr. Athavales acceptance to shinde for Rs.4000 was discharged by

cash payemt of Rs.2000 and with acceptance of new bill for the
balance plus Rs. 30 as interst on 2nd jan, 2009
c. Chandra,s acceptance received on 1st feb,2009 for Rs.2000 on next
day the bill is discounted with the bank for Rs. 1900. The discounted
bill returned by the bank as unpaid on due date i.e. on 4th March. The
bank paid Rs.20 as noting charges, pass entry on due date only.
d. Mr. Athavales acceptance to Devdas for Rs. 5000 is discharged by
Mehta,s acceptance to Athavale for the same amount on 4th
March,2009
e. Mr. Gogale retires a bill for Rs.10000 drawn on him by Mr. Athavale for
Rs.50 discount on 5th Aril, 2009

50. Abhishek draws the bill on Mohite for Rs, 10000 fo 3 months period on
1st march,2009. Mohite accepts the bill and returns it to Abhishek. The bill is
sent to bank of collecti9on on 2nd march, 2009. On maturity date Mohite finds
himself unable to make payment of the bill and request Abhishek to renew it.
Abhishek accepts the request on the condition that Mohite should pay
Rs.4050 including noting charges Rs.50 immediately. Abhishek accepts a new
bill at one month for the balance. After ten days of renewal Mohite retires the
bill by paying Rs.5900. Give journal entries in the books of Abhishek and
prepare Mohite,s A/c in the books of Abhishek.

51. On the 1st March, 2008, Karan draws a bill on Mr.Bedi worth Rs.
12000 for 3 months period. On due date Bedi informed that the bill is
dishonoured. Karan draws a new bill on that day 8including cash as noting
charges Rs.50 and interest Rs.250 for one month. The new bill is
honoured on due date. Pass Journal entries in the books of Karan.

52. Anajali from Nagpur sold goods of Rs.30000 off 10% to Rupali of
Amravati on 1st march, 2009. On next day Rupali paid Rs. 10000 in cash
and accepted a bill for two months for the balance drawn Anjali. Anjali
discounted the bill at 12% p.a. with her bank. Before due date Rupali find
herself unable to make payment of the bill and request Anjali to renew it.
Anjali accepts the proposal on the condition that Rupali should pay
Rs.5000 in cahs. Rupali accepts new bill on 8th July for one month along
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with interest Rs.200 for the balance. These arrangements were carried
through. The new bill was honoured on due date. Give journal entries in
the books of Anjali.

53. Monika drew a bill of exchange on Sona for the amount of Rs.4000
on 5th March, 2009 for three months. Monika endorsed the same to Roma
in full settlement of her account of Rs. 450 on 5th April. Sona approached
Monika for renewal of a bill. It was agreed to pay Rs.3000 immediately
togheter with interest on the remaining amount at 10% p.a. for 3 months.
All the arrangements were done properly. But afterwards Sona became
insolvent and only 35% of the amount could be recovered from her
estate. Pass journal entries=es in the books of Monika.

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