Chapter 9 from Textbook Book Keeping & Accountancy Solutions for Class 12 ACCOUNTANCY

Question 1.A1:

Answer the following question in one sentence only.

What is bill of exchange?

Answer:

A bill of exchange is an instrument in writing containing an unconditional order signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument.

Question 1.A2:

Answer the following question in one sentence only.

Who is Drawer?

Answer:

A person who writes or draws up a bill is known as drawer. He is the seller or the creditor entitled to receive money from someone. The bill of exchange is signed by the drawer of the bill.

Question 1.A3:

Answer the following question in one sentence only.

Who is Drawee?

Answer:

The person on whom a bill is drawn is known as drawee. He is the purchaser or the debtor liable to pay the amount mentioned in the bill to the drawer. The bill of exchange is accepted by the drawee.

Question 1.A4:

Answer the following question in one sentence only.

What is due date of bill?

Answer:

The date on which the payment of the bill becomes due is called the due date or the date of maturity. While calculating the due date, it is necessary to add three days to the period of bill. These three days are called "days of grace".

Question 1.A5:

Answer the following question in one sentence only.

What is an acceptance to bills of exchange?

Answer:

A bill is said to be accepted when the drawee of the bill accepts to pay the amount specified in the bill by writing the word "Accepted" on the bill and then returns it to the drawer.

Question 1.A6:

Answer the following question in one sentence only.

What is qualified acceptance?

Answer:

When a bill of exchange is accepted with some alterations in relation to the original terms of the bill, such as time, place, amount, parties or any condition to the order of the drawer, it is called qualified acceptance.

Question 1.A7:

Answer the following question in one sentence only.

When is the bill said to be honoured?

Answer:

When the amount specified in the bill of exchange is paid by the acceptor (i.e. the drawee) on the due date, it is called the honouring of the bill.

Question 1.A8:

Answer the following question in one sentence only.

When is the bill said to be dishonoured?

Answer:

When the acceptor of the bill refuses to pay the amount of the bill on the date of maturity, the bill is said to be dishonoured.

Question 1.A9:

Answer the following question in one sentence only.

What is inland bill exchange?

Answer:

A bill of exchange drawn and payable within a country is known as inland bill of exchange.

Question 1.A10:

Answer the following question in one sentence only.

What is foreign bill of exchange?

Answer:

A bill of exchange drawn in one country and payable in another is known as foreign bill of exchange.

Question 1.A11:

Answer the following question in one sentence only.

What are noting charges?

Answer:

When a bill is presented for payment and the acceptor fails to make the payment, the bill gets dishonoured. In order to keep a legal proof of such dishonour, the bill gets noted by the Notary Public (who is approved by the government). In exchange for the notary service, the Notary Public charges fees known as noting charges.

Question 1.A12:

Answer the following question in one sentence only.

When is the amount of bill of exchange payable to a specific person?

Answer:

The amount of the bill is payable either on demand or on the expiry of the fixed period mentioned in the bill.

Question 1.B1:

Give word / term or phrase for each of the following statement.

A bill of exchange drawn and accepted for a value received.

Answer:

Trade bill

Explanation: A bill of exchange drawn for the amount of purchase by the seller on the purchaser is known as a trade bill.

Question 1.B2:

Give word / term or phrase for each of the following statement.

A person who draws a bill of exchange.

Answer:

Drawer

Explanation: He is the seller or creditor entitled to receive money from someone. He writes or draws the bill and is known as drawer. The bill of exchange is signed by the drawer of the bill.

Question 1.B3:

Give word / term or phrase for each of the following statement.

A person on whom a bill of exchange is drawn.

Answer:

Drawee

Explanation: The person on whom the bill is drawn, and who is required to pay the amount mentioned in the bill, is called drawee. He is the purchaser or the debtor and is liable to make payment to the drawer.

Question 1.B4:

Give word / term or phrase for each of the following statement.

Payment in accordance with the apparent tenor of the bill.

Answer:

Honour

Explanation: When the acceptor of the bill pays the amount specified in the bill on the due date, it is called honouring the bill.

Question 1.B5:

Give word / term or phrase for each of the following statement.

Nonpayment in accordance with the apparent tenor of the bill.

Answer:

Dishonour

Explanation: When the acceptor of the bill refuses to pay the amount of bill on the due date or becomes insolvent, it is known as dishonour of the bill.

Question 1.B6:

Give word / term or phrase for each of the following statement.

Acceptance without making any change in the terms of a bill.

Answer:

General acceptance

Explanation: When the drawee of the bill accepts the bill by writing the word 'Accepted' and then signs the bill, it is known as general acceptance.

Question 1.B7:

Give word / term or phrase for each of the following statement.

Acceptance with some changes as regards the terms of a bill.

Answer:

Qualified acceptance

Explanation: When the terms of a bill of exchange are altered by the acceptor, it is called qualified acceptance. The drawee may refuse to make qualified acceptance.

Question 1.B8:

Give word / term or phrase for each of the following statement.

A bill of which payment to make on fixed period.

Answer:

After date bill

Explanation: When a bill is drawn ‘after date’, the term of the bill starts from the date of drawing of the bill. Three days of grace are also allowed on such bills.

Question 1.B9:

Give word / term or phrase for each of the following statement.

The bill which is drawn in one country and payable in other country.

Answer:

Foreign

Explanation: A bill of exchange drawn in one country and payable in another country is known as a foreign bill of exchange. For example, a bill, drawn in India and payable in USA, is a foreign bill.

Question 1.B10:

Give word / term or phrase for each of the following statement.

Encashment of the bill before due date.

Answer:

Discounting

Explanation: When the holder of a bill needs money before the maturity date, he may present the bill to a bank and get immediate payment on the security of a bill. The bank deducts a certain amount from the face value of the bill and pays the balance. This process is known as discounting.

Question 1.B11:

Give word / term or phrase for each of the following statement.

The person who transfer the ownership of the bill.

Answer:

Endorser

Explanation: The holder of a bill has an option to transfer the bill in favour of his/her creditor. In such cases, the person who transfers the bill is known as an endorser. Generally, a drawer is an endorser.

Question 1.B12:

Give word / term or phrase for each of the following statement.

The person in whose favour the bill transferred.

Answer:

Endorsee

Explanation: On endorsement, the person in whose favour the bill is transferred (i.e. the holder’s creditor) is known as an endorsee.

Question 1.B13:

Give word / term or phrase for each of the following statement.

The three extra days which are allowed over and above the period of the bill.

Answer:

Days of grace

Explanation: The date on which the payment of the bill becomes due is called the due date or the date of maturity. While calculating the due date, it is necessary to add three days to the period of the bill. These three days are known as 'days of grace'.

Question 1.B14:

Give word / term or phrase for each of the following statement.

Transfer of title of the bill from debtor to creditor.

Answer:

Endorsement

Explanation: Endorsement means when a bill of exchange is signed for the purpose of transferring it to another person. The debtor signs the bill and transfers it to his/her creditor. On endorsement, the endorsee becomes entitled to receive the payment.

Question 1.B15:

Give word / term or phrase for each of the following statement.

Payment of the bill before due date.

Answer:

Retirement

Explanation: A bill is said to be retired when the acceptor of a bill expresses his willingness to make the payment of the bill before its due date. In such cases, the holder of the bill generally allows a discount to the drawee, which is called rebate. This rebate is a gain for the party that makes the payment (i.e. the drawee) and is expense to the party receiving the payment (i.e. the drawer).

Question 1.B16:

Give word / term or phrase for each of the following statement.

Fees charged by the Notary public on dishonour of a bill.

Answer:

Noting charges

Explanation: When a bill is presented for payment and the acceptor fails to make the payment, the bill gets dishonoured. In order to keep a legal proof of such dishonour, the bill is noted by the Notary Public (who is approved by the government). In exchange for the notary service, the Notary Public charges fees known as noting charges.

Question 1.B17:

Give word / term or phrase for each of the following statement.

Officer appointed by Central Government for noting of dishonour bill.

Answer:

Notary Public

Explanation: Notary Public is an officer appointed by the Central or State Government and has the power of noting Negotiable Instruments at the time of their dishonour.

Question 1.C1:

Write True or False

Bill of exchange is an instrument in writing, containing an unconditional order.

Answer:

True

Explanation: A bill of exchange is an instrument containing in writing an unconditional order to pay a certain sum of money only to or to the order of person or bearer of the instrument. It must be signed by the maker, i.e. drawer of the bill.

Question 1.C2:

Write True or False

A bill of exchange is signed by the person on whom it is drawn.

Answer:

False

Explanation: A bill of exchange is not signed by the person on whom it is drawn (i.e. the drawee). Rather, it must be signed by the drawer (i.e. the maker) of the bill.

Question 1.C3:

Write True or False

A person to whom or as per his order, amount of bill is payable is a Payee.

Answer:

True

Explanation: The person to whom the amount of a bill is payable is known as a payee. The drawer himself or a third party, such as an endorsee, can be the payee of the bill.

Question 1.C4:

Write True or False

Honour of a bill means payment in accordance with the apparent tenor of the bill.

Answer:

True

Explanation: A bill is said to be honoured when the acceptor of the bill makes payment on the due date specified in the bill.

Question 1.C5:

Write True or False

Acceptance without making any change in the terms of a bill is called general acceptance.

Answer:

True

Explanation: When a bill of exchange is accepted without altering the terms of the bill, it is known as general acceptance, whereas when the terms of a bill of exchange are altered, it is known as qualified acceptance.

Question 1.C6:

Write True or False

Acceptance with some change as regards the terms of a bill general acceptance.

Answer:

False

Explanation: When acceptance is received with some changes in the terms of a bill, it is known as qualified acceptance. However, when a bill of exchange is accepted without altering the terms of the bill, it is known as general acceptance.

Question 1.C7:

Write True or False

A bill of which payment to make on fixed period is after date bill.

Answer:

True

Explanation: When a bill is drawn ‘after date’, the term of the bill starts from the date of drawing of the bill. Three days of grace are also allowed on such bills. For example, a bill of exchange drawn on January 23, 2014 is payable 2 months after date. The due date of the bill after adding the days of grace will be March 26, 2014.

Question 1.C8:

Write True or False

Drawee is a person who holds the title of the bill in due course.

Answer:

False

Explanation: Drawee is the person on whom the bill is drawn and who accepts the bill by writing the word 'Accepted' on it. Any subsequent holder of the bill, who holds the bill in good faith and exchanges something valuable for it, is known as the holder in due course.

Question 1.C9:

Write True or False

The inland bill which is drawn in and payable in the same country.

Answer:

True

Explanation: An inland bill is a bill that is drawn and made payable in the same country. On the other hand, a bill that is drawn in one country and made payable in another is known as foreign bill.

Question 1.C10:

Write True or False

Discounting means encashment of the bill before due date.

Answer:

True

Explanation: When the holder of a bill needs money before the maturity date, he may present the bill to a bank and get immediate payment on the security of the bill. The bank deducts a certain amount from the face value of the bill and pays the balance. This process of getting the bill en-cashed before its due date is known as discounting.

Question 1.C11:

Write True or False

Drawee can transfer the ownership of the bill.

Answer:

False

Explanation: A drawee cannot transfer the ownership of a bill. The drawer or the holder of a bill can transfer the bill of exchange by signing the bill of exchange, i.e. by endorsement.

Question 1.C12:

Write True or False

Endorsee is person in whose favor the bill transferred.

Answer:

True

Explanation: On endorsement, the person who transfers the bill is known as endorser and the person in whose favour the bill is transferred is known as endorsee.

Question 1.C13:

Write True or False

Endorsement means transfer of title of the bill from debtor to creditor.

Answer:

True

Explanation: Endorsement means signing the bill for the purpose of transferring it to another. Hence, it can be transferred from debtor to creditor.

Question 1.C14:

Write True or False

Retirement of bill means payment of the bill before due date.

Answer:

True

Explanation: When the drawee makes the payment of the bill before its due date, it is known as retiring the bill. In such cases, the holder of the bill usually allows discount, which is known as rebate.

Question 1.C15:

Write True or False

Noting charges are payable to the Notary public on honour of a bill.

Answer:

False

Explanation: Noting charges are paid to the Notary Public, who makes a note of the fact that the acceptor has refused to make the payment on the bill of exchange, i.e. the bill has been dishonoured.

Question 1.C16:

Write True or False

Payee is official person appointed by Central government for noting of dishonour bill.

Answer:

False

Explanation: A Notary Public is the official person appointed by the central government for noting a bill. He makes a note of the dishonour, i.e. when an acceptor refuses to make the payment. On the other hand, a payee is the person to whom the payment is to be made. A drawer or any other third party can be the payee to a bill of exchange.

Question 1.C17:

Write True or False

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

Answer:

True

Explanation: Sometimes, the acceptor of a bill is unable to meet the bill on its due date. In such cases, he might request the holder of the bill to cancel the original bill and draw a new bill in place of the old one. This is known as renewal of bill.

Question 1.C18:

Write True or False

A bill can't be deposited into bank for collection.

Answer:

False

Explanation: The drawer of a bill can send the bill to its bank with clear instructions to retain the bill and realise the amount of the bill on its due date. This is termed as bill sent to bank for collection. Also, in case of bills discounted with bank, the bank becomes the payee and is entitled to receive the amount on the due date.

Question 1:

PRACTICAL PROBLEMS

Hitesh sold goods for Rs 4,500 to Ashok on 1.1.2010 and drew upon him a bill of exchange payable 2 months after sight. Ashok accepted the bill and returned the same to Hitesh. On the due date the bill was met by Ashok.

Record the necessary Journal entries in the books of Hitesh and also prepare Ashok account in his books.

1. When the bill was retained by Hitesh till the date of its maturity.

2. When Hitesh immediately discounted the bill @ 15% p.a. with his bank.

3. When three days before its maturity, the bill was sent by Hitesh to his bank for collection.

4. When the bill was endorsed immediately by Hitesh in favour of his creditor Venkat.

Answer:

Case-I

Books of Hitesh
Journal Entry
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2010
Jan.01	Ashok	Dr.		4,500
	To Sales A/c				4,500
	(Goods sold to Ashok)

Jan.01	Bills Receivable A/c	Dr.		4,500
	To Ashok				4,500
	(Bill accepted by Ashok)

Mar.04	Bank A/c	Dr.		4,500
	To Bills Receivable A/c				4,500
	(Bill honoured on maturity)

Case-II

Books of Hitesh
Journal Entry
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2010
Jan.01	Ashok	Dr.		4,500
	To Sales A/c				4,500
	(Goods sold to Ashok)

Jan.01	Bills Receivable A/c	Dr.		4,500
	To Ashok				4,500
	(Bill accepted by Ashok)

Jan.01	Bank A/c	Dr.		4,387
	Discount Charges A/c	Dr.		113
	To Bills Receivable A/c				4,500
	(Bill discounted with bank @ 15% per annum)

Case-III

Books of Hitesh
Journal Entry
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2010
Jan.01	Ashok	Dr.		4,500
	To Sales A/c				4,500
	(Goods sold to Ashok)

Jan.01	Bills Receivable A/c	Dr.		4,500
	To Ashok				4,500
	(Bill accepted by Ashok)

Mar.01	Bill Sent for Collection A/c	Dr.		4,500
	To Bills Receivable A/c				4,500
	(Bill sent for Collection to Bank, 3 days before maturity)

Mar.04	Bank A/c	Dr.		4,500
	To Bill Sent for Collection A/c				4,500
	(Bill sent for collection to bank, honoured on maturity)

Case-IV

Books of Hitesh
Journal Entry
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2010
Jan.01	Ashok	Dr.		4,500
	To Sales A/c				4,500
	(Goods sold to Ashok)

Jan.01	Bills Receivable A/c	Dr.		4,500
	To Ashok				4,500
	(Bill accepted by Ashok)

Jan.01	Venkat	Dr.		4,500
	To Bills Receivable A/c				4,500
	(Bill endorsed to Venkat, a creditor)

Ashok’s Account
Dr.	Cr.
Date		Particulars	J.F.	Amount (Rs)	Date	Particulars	J.F.	Amount (Rs)
2010					2010
Jan.01		Sales A/c		4,500	Jan.01	Bills Receivable A/c		4,500

				4,500				4,500

Note: In all the four cases, Ashok’s A/c will be the same.

Question 2:

PRACTICAL PROBLEMS

On 2^nd Jan., 2011 Kiran of Kanpur purchased goods from Kavita of Kedgaon for Rs 4,850 and gave his acceptance to after date bill for 60 days on 5^th Jan, 2011 for the same amount. On the same date Kavita of Kedgaon deposited the bill into bank for collection. On the due date Kiran honoured his acceptance.

You are required to pass journal entries in the books both the parties.

Answer:

Books of Kavita
Journal Entry
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2011
Jan.02	Kiran	Dr.		4,850
	To Sales A/c				4,850
	(Goods sold on credit to Kiran)

Jan.05	Bills Receivable A/c	Dr.		4,850
	To Kiran				4,850
	(Bill accepted by Kiran)

Jan.05	Bill Sent for Collection A/c	Dr.		4,850
	To Bills Receivable A/c				4,850
	(Bills sent to bank for collection)

Mar.06	Bank A/c	Dr.		4,850
	To Bill Sent for Collection A/c				4,850
	(Bill Sent for Collection honoured on maturity)

Books of Kiran
Journal Entry
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2011
Jan.02	Purchases A/c	Dr.		4,850
	To Kavita				4,850
	(Goods purchased on credit from Kavita)

Jan.05	Kavita	Dr.		4,850
	To Bills Payable A/c				4,850
	(Bill accepted)

Mar.06	Cash/Bank A/c	Dr.		4,850
	To Bills Payable A/c				4,850
	(Amount of bill paid on maturity date)

Question 3:

PRACTICAL PROBLEMS

Vasanti sold goods on credit of Rs 8,500 to Aruna on 14^th July 2009. On the same date Vasanti drew two bills for Rs 5,000 and 3,500 for 2 and 3 months period respectively. Aruna accepted and return immediately. On 21^st July, 2009 Vasanti deposited 3 months acceptance to her bank for collections.

On the due date of the respective bills Aruna honoured 2 months acceptance but dishonoured the second for which Vasanti paid nothing chargers Rs 60 and her bank debited 50 for bank chargers

Pass the journal entries in the books of Vasanti and Aruna.

Answer:

Books of Vasanti
Journal Entry
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2009
Jul.14	Aruna	Dr.		8,500
	To Sales A/c				8,500
	(Goods sold to Aruna on credit)

Jul.14	Bills Receivable A/c (Bill no 1)			5,000
	Bills Receivable A/c (Bill no 2)			3,500
	To Aruna				8,500
	(Bill accepted by Aruna)

Jul.21	Bill Sent for Collection A/c	Dr.		3,500
	To Bills Receivable A/c (Bill no 2)				3,500
	(Bill sent to bank for collection)

Sept.17	Bank A/c	Dr.		5,000
	To Bill Receivable A/c (Bill no 1)				5,000
	(Bill honoured on maturity)

Oct.17	Aruna	Dr.		3,560
	To Bill Sent for Collection				3,500
	To Bank A/c				60
	(Bill sent for collection dishonoured and noting charges of Rs 60 paid by Vasanti)

Oct.17	Bank charges A/c	Dr.		50
	To Bank A/c				50
	(Bank charges paid)

Books of Arna
Journal Entry
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2009
Jul.14	Purchases A/c	Dr.		8,500
	To Vasanti				8,500
	(Goods purchased on credit from Vasnti)

Jul.14	Vasanti	Dr.		8,500
	To Bills Payable A/c (Bill no 1)				5,000
	To Bills Payable A/c (Bill no 1)				3,500
	(Bills accepted by Aruna)

Sept.17	Cash/Bank A/c	Dr.		5,000
	To Bills Payable A/c (Bill no 1)				5,000
	(Amount paid on maturity)

Oct.18	Bills Payable A/c (Bill no 1)	Dr.		3,500
	Noting Charges A/c	Dr.		60
	To Vasanti				3,560
	(Bill dishonoured on maturity)

Question 4:

PRACTICAL PROBLEMS

Sudhatai sold goods to Chhayatai on credit for 4 months for Rs 10,000 on 7^th Sept., 2009. Chhayatai paid on her account of Rs 4,000 at 2% cash discount and accepted bill for the balance at 2 months. On the same date Sudhatai discounted with her bank at 12% p.a. on due date Chhayatai honoured her bill.

A. You required to write journal of Sudhatai.

B. Pass journal entries in the books of Sudhatai assuming that on due date the bill is dishonoured and Sudhatai’s bank paid noting chargers Rs 100.

Answer:

Case-A

Books of Sudhatai
Journal Entry
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2009
Sept.07	Chhayatai	Dr.		10,000
	To Sales A/c				10,000
	(Goods sold to Chhayatai)

Sept.07	Cash A/c	Dr.		3,920
	Discount A/c	Dr.		80
	To Chhayatai				4,000
	(Chhayatai paid Rs 4,000 on her account @ cash discount of 2%)

Sept.07	Bills Receivable A/c	Dr.		6,000
	To Chhayatai				6,000
	(Bill accepted by Chhayatai)

Sept.07	Bank A/c	Dr.		5,880
	Discount Charges A/c	Dr.		120
	To Bills Receivable A/c				6,000
	(Bill discounted with Bank at 12% per annum)

Case-B

Books of Sudhatai
Journal Entry
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2009
Sept.07	Chhayatai	Dr.		10,000
	To Sales A/c				10,000
	(Goods sold to Chhayatai)

Sept.07	Bank A/c	Dr.		3,920
	Discount A/c	Dr.		80
	To Chhayatai				4,000
	(Chhayatai paid Rs 4,000 on her account @ cash discount of 2%)

Sept.07	Bills Receivable A/c	Dr.		6,000
	To Chhayatai				6,000
	(Bill accepted by Chhayatai)

Sept.07	Bank A/c	Dr.		5,880
	Discount Charges A/c	Dr.		120
	To Bills Receivable A/c				6,000
	(Bill discounted with Bank at 12% per annum)

Nov.10	Chhayatai	Dr.		6,100
	To Bank A/c				6,100
	(Discounted bill dishonoured and noting charges of Rs 100 paid)

Question 5:

PRACTICAL PROBLEMS

On 1^st August, 2010 Swapnali sold goods to Swapnil on credit for Rs 20,000. And drew two bills of 60% and 40% of the amount due from Swapnil for 3 and 4 months period respectively. Swapnil accepted and return it to Swapnali immediately. On 1^st September 2010 Swapnali send 3 months acceptance to her bank for collection and discounted 4 months acceptance with her bank @ 18% p.a.

On the due date of the respective bills Swapnil honoured 3 months acceptance for which bank debited Rs 50 as bank charges. On due date of 4 months acceptance Swapnil dishonoured for which Swapnali’s bank paid nothing charges Rs 100.

Pass the journal entries in the books of Swapnali and prepare Swapnil’s account in her ledger.

Answer:

Books of Swapnali
Journal Entry
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2010
Aug.01	Swapnil	Dr.		20,000
	To Sales A/c				20,000
	(Goods sold to Swapnil on credit)

Aug.01	Bills Receivable A/c (Bill no 1)	Dr.		12,000
	Bills Receivable A/c (Bill no 2)	Dr.		8,000
	To Swapnil				20,000
	(Bill accepted by Swapnil)

Sept.01	Bill Sent for Collection A/c	Dr.		12,000
	To Bills Receivable A/c (Bill no 1)				12,000
	(Bill sent for collection to bank )

Sept.01	Bank A/c	Dr.		7,640
	Discount A/c	Dr.		360
	To Bills Receivable A/c (Bill no 2)				8,000
	(Bill discounted with bank at 18% per annum before 3 months)

Nov.04	Bank A/c	Dr.		12,000
	To Bill Sent for Collection A/c				12,000
	(Bill sent for collection honoured on maturity date)

Nov.04	Bank Charges A/c	Dr.		50
	To Bank A/c				50
	(Bank charges paid)

Dec.04	Swapnil	Dr.		8,100
	To Bank A/c				8,100
	(Discounted bill dishonoured on maturity date and noting charges paid by bank)

Swapnil’s Account
Dr.	Cr.
Date		Particulars	J.F.	Amount (Rs)	Date	Particulars	J.F.	Amount (Rs)
2010					2010
Aug.01		Sales A/c		20,000	Aug.01	Bills Receivable A/c (Bill no 1)		12,000
Dec.04		Bank A/c		8,100	Aug.01	Bills Receivable A/c (Bill no 2)		8,000
					Dec.04	Balance c/d		8,100

				8,100				8,100

Question 6:

PRACTICAL PROBLEMS

On 1^st August, 2012 Omprakash drew a bill of Rs 10,000 for 60 days after date on Sharadchandra. On 15^th August, 2012 Omprakash purchased goods from Hariprasad for Rs 12,000. On the same date Omprakash endorsed Sharadchandra’s bill in favour of Hariprasad and paid the balance by cheque at 1% cash discount. On the same date Hariprasad discounted the bill with his bank for Rs 9,500.

On the due date Sharadchandra honoured his acceptance presented by Hariprasad.

You are required to pass journal entries in the books of Omprakash, Sharadchandra and Hariprasad.

Answer:

Books of Omprakash
Journal Entry
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2012
Aug.01	Bills Receivable A/c	Dr.		10,000
	To Sharadchandra				10,000
	(Bill drawn and accepted)

Aug.15	Purchases A/c	Dr.		12,000
	To Hariprasad				12,000
	(Goods purchased from Harichandra on credit)

Aug.15	Hariprasad	Dr.		12,000
	To Bank A/c				1,980
	To Discount Received A/c				20
	To Bills Receivable A/c				10,000
	(Bill endorsed to Hariprasad, and rest of the amount paid by cheque at cash discount of 1%)

Books of Sharadchandra
Journal Entry
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2012
Aug.01	Omprakash	Dr.		10,000
	To Bills Payable A/c				10,000
	(Bill accepted)

Oct.03	Bills Payable A/c	Dr.		10,000
	To Cash/Bank A/c				10,000
	(Amount of bill paid on maturity)

Books of Hariprasad
Journal Entry
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs

2012
Aug15	Omprakash	Dr.		12,000
	To Sales A/c				12,000
	(Goods sold to Omprakash)

Aug.15	Bank A/c	Dr.		1,980
	Discount A/c	Dr.		20
	Bills Receivable A/c	Dr.		10,000
	To Omprakash A/c				12,000
	(Endorsed bill accepted for Rs 10,000 and rest of the amount received in cash after allowing cash discount of 1%)

Oct.03	Cash/Bank A/c	Dr.		10,000
	To Bills Receivable A/c				10,000
	(Endorsed bill honoured on due date)

Question 7:

PRACTICAL PROBLEMS

On 5^th September, 2010 Prakash Patil accepted a bill of Rs 16,000 drawn by Chandu Chaudhari for 3 months. This bill was drawn for amount which Prakash Patil owed to Chandu Chaudhari. On same date Chandu Chaudhari purchased goods from Magan Mahajan for Rs 20,000 for this Chandu Chaudhari endorsed Prakash Patil’s acceptance in favour of Magan Mahajan and accepted 2 months bill for the balance due. On 5^th October, 2010 Magan Mahajan discounted both the bill with his bank @ 12% p.a.

On the due date Prakash Patil’s honoured his acceptance while Chandu Chaudhari unable to meet the payment for his acceptance. Magan Mahajan’s bank paid noting charges Rs 100.

Pass Journal entries in the books of Magan Mahajan and also prepare Prakash Patil’s and Magan Mahajan ledger account in the books of Chandu Chaudhari.

Answer:

Books of Magan Mahajan
Journal Entry
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2010
Sept.05	Chandu Chaudhari	Dr.		20,000
	To Sales A/c				20,000
	(Goods sold to Chandu Chaudhari)

Sept.05	Bills Receivable A/c (Bill no 1)	Dr.		16,000
	Bills Receivable A/c (Bill no 2)			4,000
	To Chandu Chaudhari				20,000
	(Bill drawn and accepted)

Oct.05	Bank A/c	Dr.		15,680
	Discount A/c	Dr.		320
	To Bills Receivable A/c (Bill no 1)				16,000
	(Bill discounted with the Bank @ 12% per annum before 2 months)

Oct.05	Bank A/c	Dr.		3,960
	Discount A/c	Dr.		40
	To Bills Receivable A/c (Bill no 2)				4,000
	(Bill discounted with the Bank @ 12% per annum before 2 months)

Nov.08	Chandu Chaudhari	Dr.		4,100
	To Bank A/c				4,100
	(Discounted bill dishonoured on maturity date, noting charges of Rs 100 paid)

In the Books of Chandu Chaudhari:

Prakash Patil’s Account
Dr.	Cr.
Date		Particulars	J.F.	Amount (Rs)	Date	Particulars	J.F.	Amount (Rs)
2011					2011
Sept.05		Balance b/d		16,000	Sept.05	Bills Receivable A/c		16,000
				16,000				16,000

Magan Mahajan’s Account
Dr.	Cr.
Date		Particulars	J.F.	Amount (Rs)	Date	Particulars	J.F.	Amount (Rs)
2011					2011
Sept.05		Bills Receivable A/c		16,000	Sept.05	Purchases A/c		20,000
Sept.05		Bills Payable A/c		4,000	Nov.08	Bills Payable A/c		4,100
Nov.08		Balance c/d		4,100
				24,100				24,100

Question 8:

PRACTICAL PROBLEMS

Harbhajan draws a bill on Manmit for Rs 8,000 at 3 months. Manmit accepts and return to Harbhajan. Harbhajan then sends the bill towards his bank for collections.

On due date Manmit find himself unable to make payment of the bill and request Harbhajan to renew it. He accepted the proposal on the condition that Manmit should pay Rs 2,000 along with interest @ 15% p.a. in cash and should accepts new bill for the balance at 2 months. These arrangements were carried through. One month before Manmit retired his acceptance @ 12% p.a.

Give journal entries and Manmit’s Account in the books of Harbhajan.

Answer:

Books of Harbhajan
Journal Entry
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs

	Bills Receivable A/c	Dr.		8,000
	To Manmit				8,000
	(Bill drawn and accepted)

	Manmit	Dr.		8,000
	To Bills Receivable A/c				8,000
	(Bill dishonoured on due date)

	Manmit	Dr.		150
	To Interest A/c				150
	(Interest charged for renewal of bill)

	Cash A/c	Dr.		2,150
	Bills Receivable A/c	Dr.		6,000
	To Manmit				8,150
	(Rs 2,000 along with the interest received in advance and for rest of the amount new bill was drawn and accepted)

	Cash A/c	Dr.		5,940
	Rebate A/c	Dr.		60
	To Bills Receivable A/c				6,000
	(Bill retired by Manmit before one month @ 12% per annum)

Manmit’s Account
Dr.	Cr.
Date		Particulars	J.F.	Amount (Rs)	Date	Particulars	J.F.	Amount (Rs)

		Balance b/d		8,000		Bills Receivable A/c		8,000
		Bills Receivable A/c		8,000		Cash A/c		2,150
		Interest A/c		150		Bills Receivable A/c		6,000
				16,150				16,150

Question 9:

PRACTICAL PROBLEMS

On 1^st April, 2011 Umakant draws a bill for Rs 25,000 on Laxmikant for 4 months period. The bill is accepted and returned to Umakant. On the same date Umakant discounted the bill with his bank @ 12% p.a.

Before due date Laxmikant finds himself unable the bill, hence required Umakant to renew the bill for further period of 2 months. Umakant agreed and he took the bill back from bank and received new acceptance for Rs 26,000 including interest. This new bill is duly honoured by Laxmikant on due date.

Write Journal of Umakant and Laxmikant for the above bill transactions.

Answer:

Books of Umakant
Journal Entry
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2011
Apr.01	Bills Receivable A/c	Dr.		25,000
	To Laxmikant				25,000
	(Bill drawn and accepted)

Apr.01	Bank A/c	Dr.		24,000
	Discount Charges A/c	Dr.		1,000
	To Bills Receivable A/c				25,000
	(Bill discounted with Bank @ 12% per annum before 4 months)

Aug.04	Laxmikant	Dr.		25,000
	To Bank A/c				25,000
	(Bill cancelled)

Aug.04	Laxmikant	Dr.		1,000
	To Interest A/c				1,000
	(Interest charges due)

Aug.04	Bills Receivable A/c	Dr.		26,000
	To Laxmikant				26,000
	(New bill was drawn and accepted including interest of Rs 1,000)

Oct.07	Bank A/c	Dr.		26,000
	To Bills Receivable A/c				26,000
	(Bill honoured on due date)

Books of Laxmikant
Journal Entry
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2011
Apr.01	Umakant	Dr.		25,000
	To Bills Payable A/c				25,000
	(Bills accepted)

Aug.04	Bills Payable A/c	Dr.		25,000
	To Umakant				25,000
	(Bill cancelled)

Aug.04	Interest A/c	Dr.		1,000
	To Umakant				1,000
	(Interest charges due)

Aug.04	Umakant	Dr.		26,000
	To Bills Payable A/c				26,000
	(New bill accepted including interest of Rs 1,000)

Oct.07	Bills Payable A/c	Dr.		26,000
	To Bank A/c				26,000
	(Amount of bill paid on due date)

Question 10:

PRACTICAL PROBLEMS

On 1^st June, 2010 Narayan draws a bill for Rs 50,000 on Chunilal for 4 months period.
The bill is duly accepted and returned to Narayan. One month after the date. Narayan discounted the bill with bank @ 18% p.a.

Before due date Chunilal dishonoured his acceptance. Bank paid noting charges Rs 1,125. Narayan requested to renew the bill for further period of 2 months. Narayan agreed he took the bill back from bank and received new acceptance for 40% amount of the bill with full amount of noting charges and cheque for 60% balance plus interest @ 12% p.a.

Before the due date Chunilal declared insolvent and 30% of the amount due could be recovered from his private estate.

Write Journal of Narayan and Chunilal for the above bill transactions.

Answer:

Books of Narayan
Journal Entry
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2010
Jun.01	Bills Receivable A/c	Dr.		50,000
	To Chunilal				50,000
	(Bill drawn and accepted)

Jul.01	Bank A/c	Dr.		47,750
	Discount Charges A/c	Dr.		2,250
	To Bills Receivable A/c				50,000
	(Bill discounted with Bank @ 185 per annum before 3 months)

Oct.04	Chunilal	Dr.		51,125
	To Bank A/c				51,125
	(Discounted bill cancelled and noting charges of Rs 1,125 paid)

Oct.04	Chunilal	Dr.		400
	To Interest A/c				400
	(Interest charges due)

Oct.04	Bank A/c	Dr.		30,400
	To Chunilal				30,400
	(60% of the amount with interest charges received by cheque)

Oct.04	Bill Receivable A/c	Dr.		21,125
	To Chunilal				21,125
	(New Bill was drawn and accepted)

Dec.07	Chunilal	Dr.		21,125
	To Bill Receivable A/c				21,125
	(Bill cancelled on insolvency)

Dec.07	Cash/Bank A/c	Dr.		6,338
	Bad-Debts A/c	Dr.		14,787
	To Chunilal				21,125
	(Chunilal became insolvent and only 30% of the amount recovered from his property)

Books of Chunilal
Journal Entry
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2010
Jun.01	Narayan	Dr.		50,000
	To Bills Payable				50,000
	(Bill drawn and accepted)

Oct.04	Bills Payable A/c	Dr.		50,000
	Noting Charges A/c	Dr.		1,125
	To Narayan				51,125
	(Bill cancelled with noting charges of Rs 1,125 paid by Narayan’s Bank A/c)

Oct.04	Interest A/c	Dr.		400
	To Narayan				400
	(Interest charges due)

Oct.04	Narayan	Dr.		30,400
	To Bank A/c				30,400
	(60% of the mount along with interest paid by cheque)

Oct.04	Narayan	Dr.		21,125
	To Bills Payable A/c				21,125
	(New bill was accepted for 40% of the amount along with noting charges)

Dec.07	Bills Payable A/c	Dr.		21,125
	To Narayan				21,125
	(Bill cancelled on insolvency)

Dec.07	Narayan	Dr.		21,125
	To Cash/Bank A/c				6,338
	To Deficiency A/c				14,787
	(Chunilal became insolvent and only 30% amount paid and rest of the amount written off as deficiency)

Question 11:

PRACTICAL PROBLEMS

Sushant owes Surekha Rs 1,25,000 Surekha draws a bill for Rs 1,00,000 on Sushant for 4 months period and received the cheque for the balance. The bill is duly accepted and returned by Sushant. On the same date Surekha endorsed Sushant’s acceptance to Suresh.

On the due date Suresh informed Surekha that Sushant dishonoured his acceptance and Rs 3,175 paid as noting charges Surekha then drew a new bill for 3 month on Sushant including noting charges and interest Rs 4,000. On the due date bill was duly honoured by Sushant.

Write Journal entries in the books of Surekha and prepare Surekha’s account in the books of Sushant.

Answer:

Books of Surekha
Journal Entry
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs

	Bank A/c	Dr.		25,000
	Bills Receivable A/c	Dr.		1,00,000
	To Sushant				1,25,000
	(Bill drawn and accepted and rest of the amount received in Cash)

	Suresh	Dr.		1,00,000
	To Bills Receivable A/c				1,00,000
	(Bill endorsed to Suresh, a creditor)

	Sushant	Dr.		1,03,175
	To Suresh				1,03,175
	(Bill endorsed to Suresh, dishonoured and noting charges of Rs 3,175 paid)

	Bills Receivable A/c	Dr.		1,07,175
	To Sushant				1,03,175
	To Interest A/c				4,000
	(New bill drawn and accepted including interest of Rs 4,000)

	Cash/Bank A/c	Dr.		1,07,175
	To Bills Receivable A/c				1,07,175
	(Bill honoured on due date)

In the Books of Sushant
Surekha’s Account
Dr.	Cr.
Date		Particulars	J.F.	Amount (Rs)	Date	Particulars	J.F.	Amount (Rs)

		Bank A/c		25,000		Balance b/d		1,25,000
		Bills Payable A/c		1,00,000		Bills Payable A/c		1,00,000
		Bills Payable		1,07,175		Noting Charges A/c		3,175
						Interest A/c		4,000
				2,32,175				2,32,175

Question 12:

PRACTICAL PROBLEMS

On 7^th May, 2011 Kulkarni of Karvenagar draws a bill on Patwardhan of Latur for Rs 18,000 at 3 months. Patwardhan accepts and returns it to Kulkarni. Kulkarni then sent the bill into his bank for collections.

On due date Patwardhan finds himself unable to make payment of the bill and request Kulkarni to renew it. Kulkarni agreed on the condition that Patwardhan should pay Rs 5,000 in cash, and should accept new bill for the balance at 2 months with interest @ 18% p.a. These arrangements were carried through. Before due date Patwardhan declared as insolvent and 20% of the amount due could be recovered from his private estate as first and final dividend.

Give journal entries in the books of Kulkarnis. Also prepare Kulkarni’s Accounts in the books of Patwardhan.

Answer:

Books of Kulkarni
Journal Entry
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2011
May.07	Bills Receivable A/c	Dr.		18,000
	To Patwardhan				18,000
	(Bill drawn and accepted)

May.07	Bill Sent for Collection A/c	Dr.		18,000
	To Bills Receivable A/c				18,000
	(Bill sent to bank for collection)

Aug.10	Patwardhan	Dr.		18,000
	To Bill Sent for Collection A/c				18,000
	(Bill cancelled)

Aug.10	Cash A/c	Dr.		5,000
	To Patwardhan				5,000
	(Cash received from Patwardhan)

Aug.10	Patwardhan	Dr.		390
	To Interest A/c				390
	(Interest charges due on Rs 13,000 @ 18% for 2 months)

Aug.10	Bills Receivable A/c	Dr.		13,390
	To Patwardhan				13,390
	(New bill drawn and accepted with interest of Rs 390)

Oct.13	Patwardhan	Dr.		13,390
	To Bills Receivable A/c				13,390
	(Bill cancelled due to insolvency)

Oct.13	Cash/Bank A/c	Dr.		2,678
	Bad-Debts A/c	Dr.		10,712
	To Patwardhan				13,390
	(20% of the amount recovered from his private estate)

In the Books of Patwardhan
Kulkarni’s Account
Dr.	Cr.
Date		Particulars	J.F.	Amount (Rs)	Date	Particulars	J.F.	Amount (Rs)
2011					2011
May.07		Bills Payable A/c		18,000	May.07	Balance b/d		18,000
Aug.10		Cash A/c		5,000	Aug.10	Bills Payable A/c		18,000
Aug.10		Bills Payable		13,390	Oct.13	Interest A/c		390
Oct.13		Cash A/c		2,678	Oct.13	Bills Payable A/c		13,390
Oct.13		Deficiency		10,712

				49,780				49,780

Question 13:

On 1^st Sept., 2010 Badrinath drew a bill of Rs 20,000 on Dinanath at 4 months. The bill was duly accepted by Dinanath. On 5^th Sept., 2010 Badrinath endorsed the bill in favour of Somnath. However on 1^st January, 2012 Dinanath approached to Badrinath and requested bill be renewed for a further period of 3 months at 15% p.a. Badrinath agreed and paid necessary money to Somnath. Before one month of the due date of the new bill Dinanath retired his acceptance @ 10% p.a.

Pass journal entries in the books Badrinath and Dinanath.

Answer:

Books of Badrinath
Journal Entry
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2010
Sept.01	Bills Receivable A/c	Dr.		20,000
	To Dinanath				20,000
	(Bill drawn and accepted)

Sept.05	Somnath	Dr.		20,000
	To Bills Receivable A/c				20,000
	(Bill endorsed to Somnath)
2011
Jan.01	Dinnanth	Dr.		20,000
	To Badrinath				20,000
	(Bill cancelled)

Jan.01	Badrinath	Dr.		750
	To Interest A/c				750
	(Interest charges due on Rs 20,000 @ 15% per annum for 3 moths)

Jan.01	Bills Receivable A/c	Dr.		20,750
	To Badrinath				20,750
	(New bill was drawn and accepted including interest of Rs 750)

Feb.01	Cash/Bank A/c	Dr.		20,577
	Rebate A/c	Dr.		173
	To Bills Receivable A/c				20,750
	(Bill retired under the rebate of 10% per annum, one month before the due date)

Books of Dinanath
Journal Entry
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2010
Sept.01	Badrinath	Dr.		20,000
	To Bills Payable A/c				20,000
	(Bill accepted)

Jan.01	Bills Payable A/c	Dr.		20,000
	To Badrinath				20,000
	(Bill cancelled)

Jan.01	Interest A/c	Dr.		750
	To Badrinath				750
	(Interest charges due on Rs 20,000 @ 15% for 3 months)

Jan.01	Badrinath	Dr.		20,750
	To Bills Payable A/c				20,750
	(Bill accepted with interest charges of Rs 750)

Feb.01	Bills Payable A/c	Dr.		20,750
	To Cash/Bank A/c				20,577
	To Rebate A/c				173
	(Bill retired under the rebate of 10% per annum, one month before the due date)

Note: As per the book, Dinanath approached Badrinath for the renewal of bill on January 01,2012 but it should be on January 01,2011.

Question 14:

PRACTICAL PROBLEMS

Journalise the following bill transactions in the books of Gopal as on 14^th August, 2010.

1. Shruti’s acceptance to Gopal Rs 4,500 retired one month before due date at rebate 10% p.a.

2. Discounted 3 months acceptance of Chandrakant for Rs 3,500 with bank @ 12% p.a.

3. Received cheque Rs 2,000 and 2 months acceptance drawn on Sushama for Rs 10,000 for the balance due on her account.

4. Endorsed Shantaram’s acceptance at 2 months of Rs 5,000 in favour of Balchandra and paid cash Rs 2,500 in full settlement of this account Rs 7,800.

5. Sold goods of Rs 13,500 on credit to Nanda. Drew 2 months bill on her. Which is duly accepted and returned by her.

Answer:

Books of Gopal
Journal Entry
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2010
Aug.14	Cash/Bank A/c	Dr.		4,462
1.	Rebate A/c	Dr.		38
	To Bills Receivable A/c				4,500
	(Bill retired under the rebate of 10% per annum, one before the due date)

Aug.14	Bank A/c	Dr.		3,395
2.	Discount A/c	Dr.		105
	To Bills receivable A/c				3,500
	(Bill discounted with Bank @ 12% per annum before 3 months)

Aug,14	Bank A/c	Dr.		2,000
3.	Bills Receivable A/c	Dr.		10,000
	To Sushama				12,000
	(cheque received for Rs 20,000 and for Rs 10,000 bill has been drawn and accepted)

Aug.14	Balchandra	Dr.		7,800
4.	To Cash A/c				2,000
	To Discount Received A/c				800
	To Bills Receivable A/c				5,000
	(Cash of Rs 2,000 paid and bill for Rs 5,000 endorsed to Balchandra, a creditor, in full settlement of his account of Rs 7,800)

Aug.14	Nanda	Dr.		13,500
5.	To Sales A/c				13,500
	(Goods sold to Nanda on credit)

Aug.14	Bills Receivable A/c	Dr.		13,500
	To Nanda				13,500
	(Bill drawn and accepted)

Question 15:

PRACTICAL PROBLEMS

Journalise the following bill transactions as on 21^st May, 2010 in the books of Prabodhan.

A. Renewed Veerendra’s acceptance of Rs 17,500 due on 21^st May 2010 with interest Rs 500 for 2 months.

B. Bank informed that Radhabai’s acceptance of Rs 1,400 which was discounted dishonoured, bank paid noting charges Rs 185.

C. Sent acceptance of Rs 12,000 at 120 days after sight, drawn by Mudhukar for the amount due to him.

D. Pandharinath honoured his acceptance of Rs 8,500 which was deposited into bank for collection.

Answer:

Books of Prabodhan
Journal Entry
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2010
May 21	Veerendra	Dr.		17,500
A.	To Bills Receivable A/c				17,500
	(Verendra’s acceptance cancelled for renewal)

May 21	Veerendra	Dr.		500
	To Interest				500
	(Interest charged on his account)

May 21	Bills Receivable A/c	Dr.		18,000
	To Veerendra				18,000
	(New bill has been drawn and accepted)

May 21	Radhabai	Dr.		1,585
B.	To Bank A/c				1,585
	(Bill discounted with Bank dishonoured and noting charges of Rs 185 has been paid)

May 21	Mudhukar	Dr.		12,000
C.	To Bills Payable A/c				12,000
	(Bill accepted)

May 21	Bank A/c	Dr.		8,500
D.	To Bill Sent for Collection A/c				8,500
	(Bill honoured which was sent to bank for collection)

Question 16:

PRACTICAL PROBLEMS

Journalise the following bill transactions as on 31^st July, 2011 in the books of Pratapsing.

A. Renewed Vinyak’s acceptance of Rs 6,000 due on 31^st July, 2011 by accepting cash Rs 2,000 and drawing bill for the balance with interest @ 18% p.a. for 3 months.

B. Accepted a bill of Rs 5,000 at 3 months at sight, drawn by Arvind for the amount due to him Rs 6,000 and balance paid by cheque.

C. Jethabhai honoured his acceptance of Rs 9,800 which was deposited into bank for collection and bank debited Rs 80 for bank charges.

D. Bank informed that Prajakta’s acceptance of Rs 4,000 which was discounted dishonoured, bank paid noting charge Rs 85. Renewed at her request for next 2 months with interest @ 18% p.a.

Answer:

Books of Pratapsing
Journal Entry
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2011
Jul.31	Vinyak	Dr.		6,000
A.	To Bills Receivable A/c				6,000
	(Bill cancelled for renewal of acceptance)

	Vinyak	Dr.		180
	To Interest A/c				180
	(Interest charged on his account for Rs 4,000 @ 18% per annum for 3 months)

	Cash A/c	Dr.		2,000
	Bills Receivable A/c	Dr.		4,180
	To Vinyak				6,180
	(Cash received and new bill has been drawn and accepted)

Jul.31
B.	Arvind	Dr.		6,000
	To Bank A/c				1,000
	To Bills Receivable A/c				5,000
	(Bill of Rs 5,000 accepted and rest of the amount paid by cheque)

Jul.31	Bank A/c	Dr.		9,800
C.	To Bill sent for Collection A/c				9,800
	(Bill sent for collection, honoured on due date)

	Bank Charges A/c	Dr.		80
	To Bank A/c				80
	(Bank Charges paid)

Jul.31
D.	Prajakta	Dr.		4,085
	To Bank A/c				4,085
	(Bill discounted with Bank, dishonoured and noting charges of Rs 85 paid)

	Parjakta	Dr.		123
	To Interest A/c				123
	(Interest charges due on Rs 4,085 @ 18% per annum for 2 months)

	Bills Receivable A/c	Dr.		4,208
	To Prajkta				4,208
	(New Bill has been drawn and accepted)

Question 17:

PRACTICAL PROBLEMS

Journalise the following transactions on following dates in the books of Ankur.

A. On 1^st April, 2011 Kiran informs Ankur that Kajol’s acceptance of Rs 8,000 endorsed to him dishonoured and noting charges paid Rs 250.

B. On 11^th April, 2011 Ankur renews his acceptance of Rs 7,400 to Amol by paying cash Rs 2,400 and accepting new bill for 2 months for the balance plus interest @ 15% p.a.

C. On 15^th April, 2011 Nilima retired her acceptance to Ankur of Rs 5,700 by paying cash Rs 5,300.

D. On 21^st April, 2011 recovered Rs 50% of the amount due, from the private estate of Liladhar who declared as insolvent, against his bill of Rs 3,800 which was dishonoured by him on 29^th December, 2010 and noting charges paid Rs 80.

Answer:

Books of Ankur
Journal Entry
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2011
Apr,01	Kajol	Dr.		8,250
A.	To Kiran				8,250
	(Kajol’s acceptance endorsed to Kiran was dishonoured and noting charges incurred)

Apr.11	Ankur	Dr.		7,400
B.	To Bills Receivable A/c				7,400
	(Bill cancelled for renewal)

	Ankur	Dr.		125
	To Interest A/c				125
	(Interest charges due on Rs 5,000 @ 15% for 2 months)

	Cash A/c	Dr.		2,400
	Bills Receivable A/c	Dr.		5,125
	To Ankur				7,125
	(Cash received and new bill has been drawn and accepted including Interest charges)


Apr.15	Cash A/c	Dr.		5,300
C.	Rebate A/c	Dr.		400
	To Bills Receivable A/c				5,700
	(Bill retired under the rebate of Rs 400)

Apr.21	Cash/Bank A/c	Dr.		1,940
D.	Bad-Debts A/c	Dr.		1,940
	To Liladhar				3,880
	(Liladhar became insolvent and 50% of the amount recovered from his private estate)

Question 18:

PRACTICAL PROBLEMS

Journalise the following transactions on following dates in the books of Gajanan

A. On 3^rd October, 2012 Bankatlal informs Gajanan that Navnath’s acceptance of Rs 16,000 endorsed to him dishonoured and noting charges paid Rs 200.

B. On 9^th October, 2012 Vishwanath’s acceptance for 120 days of Rs 15,500 dated 24^th September, 2008 deposited into bank for collections.

C. On 11^th October 2012 Gajanan sold goods to Kartik for Rs 4,500 and received own acceptance from him, which was given to milind of Rs 4,500 and due for payment on this date.

D. 20^th October, 2012 recovered 40% of the amount due the private estate of Jyoti who declared as insolvent, against bill accepted by her for Rs 6,000 which was dishonoured on 29^th September, 2008.

E. On 21^st October, 2012 Gajanan renews his acceptance of Rs 7,500 to Pandurang by paying cheque Rs 3,500 and accepting new bill for 2 months for the balance plus interest @ 18% p.a.

Answer:

Books of Gajanan
Journal Entry
Date	Particulars		L.F.	Debit Amount Rs	Credit Amount Rs
2012
Oct.03	Navnath	Dr.		16,200
A.	To Bankatlal				16,200
	(Navanth’s acceptance endorsed ro Bankatlal was dishonoured and noting charges incurred)

Oct.09	Bill Sent for Collection A/c	Dr.		15,500
B.	To Bills Receivable A/c				15,500
	(Bill sent to bank for collection)

Oct.11	Kartik	Dr.		4,500
C.	To Sales A/c				4,500
	(Sold goods to Kartik)

	Bills Receivable A/c	Dr.		4,500
	To Kartik				4,500
	(Bill drawn and accepted)

	Milind	Dr.		4,500
	To Bills Receivable A/c				4,500
	(Bill endorsed to Milind for amount due)

Oct.20	Cash/Bank A/c	Dr.		2,400
D.	Bad-Debts A/c	Dr.		3,600
	To Joyti				6,000
	(Joyti became insolvent and 40% of the amount recovered from his private estate)

Oct.21	Bills Payable A/c	Dr.		7,500
E.	To Pandurang				7,500
	(Bill cancelled for renewal)

	Interest A/c	Dr.		120
	To Pandurang				120
	(Interest charges due on Rs 4,000@ 18% per annum for 2 months)

	Pandurang	Dr.		7,620
	To Bills Payable A/c				4,120
	To Bank A/c				3,500
	(Cheque paid for Rs 3,500 and new bill has been accepted including interest charges)

Book Keeping & Accountancy Solutions Solutions for Class 12 Commerce Accountancy Chapter 9 - Bill Of Exchange (Trade Bill)

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