OMTEX CLASSES BILL OF EXCHANGE

Problem No. 1

Journalize the following transactions in the books of

Maharaja. [Ans]

i. Ayub informs Maharaja that Sadashiv’s acceptance for Rs.

2,000 endorsed to Ayub has been dishonoured, noting charges

amounted to Rs. 150.

ii. Pankaj renews his acceptance to Maharaja for Rs. 1200 by

paying Rs. 400 in cash and accepting a fresh bill for the balance

plus interest at 12% p.a. for 3 months..

iii. Vaibhav’s acceptance to Maharaja for Rs. 6000 retired one

month before the due date at a discount of 12%p.a.

iv. Bank informs Maharaja as to the dishonour of Kasam’s

acceptance for Rs. 2000 to Maharaja discounted with Bank

noting charges Rs. 200.

Problem No. 2

Journalise the following transactions in the book’s of

Bhaskar. [Ans]

i. Suresh informed Bhaskar that Nishad’s acceptance for Rs.

2500 endorsed to Suresh has been dishonoured and noting

charges amounted to Rs. 25.

ii. Rajesh renews his acceptance to Bhaskar for Rs. 7500 by

OMTEX CLASSES BILL OF EXCHANGE

paying Rs. 2500 in cash and accepting a fresh bill for the

balance plus interest @ 10% p.a. for three months.

iii. Mandar retired his acceptance to Bhaskar for Rs. 3,800 by

paying Rs. 3750 in cash.

iv. Bhaskar sent a bill of Dayaram for Rs. 5000 to the bank for

collection. But the bank informed that the bill has been

dishonoured by Dayaram.

Problem No. 3

Journalize the following transactions in the books of

Kamesh: [Ans]

i. Nanda informs Kamesh that Shanti’s acceptance for Rs. 4,000

endorsed to Nanda has been dishonoured and noting charges

have been Rs. 100.

ii. Ashok renews his acceptance to Kamesh for Rs. 2400 by

paying Rs. 800 in cash and accepting a new bill for the balance

plus interest @ 12 p.a. for 3 months.

iii. Deva’s acceptance to Kamesh Rs. 12,000 is retired one

month before its due date at a discount of 12% p.a.

iv. The bank informs Kamesh that Sudhakar’s acceptance for

Rs. 4,000 has been dishonoured and it has paid noting charges

Rs. 80.

Problem no. 4

OMTEX CLASSES BILL OF EXCHANGE

On 1st March, 2013. Ramchandra sold goods to Raman worth

Rs. 8,000/- and Raman accepted the Bill for Rs. 8,000/- at 3

months drawn by Ramchandra. Ramchandra discounted the bill

with his bank @ 6% p.a. On due date the bill was dishonoured

and Raman requested Ramchandra to accept Rs. 4,000/-

immediately and draw upon him a new bill for the remaining

amount at 3 months together with an interest @ 10% p.a.

Ramchandra agreed. The second Bill was duly honoured. Give

Journal entries in the books of Ramchandra. [Ans]

Problem no. 5

Premlal sold goods to Sunderlal worth Rs. 10,000/- and

Sunderlal accepted the bill for Rs. 10,000/- at 3 months drawn

by Premlal. Premlal discounted the bill with his bank @ 6 % p.a.

On due date the bill was dishonoured and Sunderlal requested

Premlal to accept Rs. 4,000 immediately and draw upon him a

new bill for the remaining amount at 3months together with an

interest at 10% p.a. Premlal agreed and the second bill was duly

honoured. Give the Journal entries in the books of

Premlal. [Ans.]

Problem no. 6

Archana purchased goods from Babita on credit for Rs. 20,000.

On next day Archana paid Rs. 10,000 to Babita and accepted a

bill drawn by Babita for the balance amount for four months.

Babita discounted the bill with her bank for Rs. 9600/-. Before

OMTEX CLASSES BILL OF EXCHANGE

the due date Archana approached Babita with a request to renew

the Bill. Babita agreed with the condition that Archana should

pay Rs. 6000 along with interest of Rs. 120 and accept a new

bill for the balance. These arrangements were duly carried out.

New bill is met on the due date. Pass journal entries in the books

of Babita. [Ans.]

Problem no. 7

Bhagyashri sold goods to Rupa worth Rs. 24,000 to Rupa. On

the next day Rupa paid Rs. 10,000 in cash and accepted 4

months bill for balance amount drawn by Bhagyashri.

Bhagyashri discounted the bill at 10% p.a. after one month with

her bank. On due date Rupa dishonoured her acceptance and

noting charges amounted to Rs. 200. Rupa paid half the amount

of the bill and full amount of noting charges. Rupa accepted a

new bill at 2 months for the balance amount plus interest Rs.

100. Pass necessary journal entries in the books of Bhagyashri.

[Ans.]

Problem no. 8

Baloo owes Kaloo Rs.8000. Kaloo then draws a bill for Rs. 8000

on Baloo for a period of three months. Baloo accepts and return

it to Kaloo. Kaloo discounted the bill with his bank @ 12 % p.a.

On due date, the bill was dishonoured noting charges amount to

Rs. 30. Kaloo then draws a bill for the balance plus interest of

Rs. 170. Before the due date of this bill Baloo pays the amount

at a discount of Rs. 40 to retire the bill. Pass Journal Entries in

the books of Kaloo. [Ans.]

OMTEX CLASSES BILL OF EXCHANGE

Problem No. 9.

Minal draws a bill on Usha for Rs. 5,000 at 3 months. Usha

accepts the bill and return to Minal. Minal discounted the bill @

12 % p.a. with the bank. On Maturity Usha finds herself unable

to make payment of the bill and requested Minal to renew the

bill. Minal accepts the proposal on the condition that Usha

should Pay Rs. 2,000 in cash and accept a new bill at one month

along with interest at 10% p.a. These arrangements were carried

through. Usha retires the bill by paying Rs. 3015/- Pass Journal

Entries in the books of Minal. [Ans]

Problem No. 10

Sonia draws a bill on Moni for Rs. 6,000 at 4 months. Moni

accepts the bill and returns it to Sonia who discounts the bill

with the bank at a discount of 8% p.a. Before the due date of Bill

Moni requested Sonia to accept Rs. 4000 in cash and draw a bill

for the balance plus interest at 12% p.a. for two months. Sonia

draws a bill as the request is agreed. The bill is sent to bank for

collection. On the due date the bill was honoured. Pass the

necessary journal entries in the books of Sonia. [Ans]

Problem No. 11

On 1st March, 2014. Bheem sold goods to Raju worth Rs.

10,000/- and Raju accepted the Bill for Rs. 10,000/- at 3 months

drawn by Bheem. Bheem discounted the bill with his bank @

10% p.a. On due date the bill was dishonoured and Raju

requested Bheem to accept Rs. 4,000/- immediately and draw

OMTEX CLASSES BILL OF EXCHANGE

upon him a new bill for the remaining amount at 3 months

together with an interest @ 10% p.a. Bheem agreed. The second

Bill was duly honoured. Give Journal entries in the books of

Bheem. [Ans]

Problem No. 12

Sachin sold goods to Dhoni worth Rs. 1,00,000/- and Dhoni

accepted the bill for Rs. 1,00,000/- at 3 months drawn by

Sachin. Sachin discounted the bill with his bank @ 10 % p.a. On

due date the bill was dishonoured and Dhoni requested Sachin to

accept Rs. 40,000 immediately and draw upon him a new bill for

the remaining amount at 3months together with an interest at

10% p.a. Sachin agreed and the second bill was duly honoured.

Give the Journal entries in the books of Dhoni. [Ans]

Problem No. 13

Rose purchased goods from Lilly on credit for Rs. 2,000. On

next day Rose paid Rs. 1,000 to Lilly and accepted a bill drawn

by Lilly for the balance amount for four months. Lilly

discounted the bill with her bank for Rs. 960/-. Before the due

date Rose approached Lilly with a request to renew the Bill.

Lilly agreed with the condition that Rose should pay Rs. 600

along with interest of Rs. 12 and accept a new bill for the

balance. These arrangements were duly carried out. New bill is

met on the due date. Pass journal entries books of Lilly. [Ans]

OMTEX CLASSES BILL OF EXCHANGE

Problem No. 14

Kaveri sold goods to Ganga worth Rs. 4,000 to Ganga. On the

next day Ganga paid Rs. 1,000 in cash and accepted 4 months

bill for balance amount drawn by Kaveri. Kaveri discounted the

bill at 10% p.a. after one month with her bank. On due date

Ganga dishonoured her acceptance and noting charges amounted

to Rs. 20. Ganga paid half the amount of the bill and full amount

of noting charges. Ganga accepted a new bill at 2 months for the

balance amount plus interest Rs. 100. Pass necessary journal

entries in the books of Kaveri. [Ans]

Problem No. 15

Ronaldo owes Ricardo Rs.80,000. Ricardo then draws a bill for

Rs. 80,000 on Ronaldo for a period of three months. Ronaldo

accepts and return it to Ricardo. Ricardo discounted the bill with

his bank @ 10 % p.a. On due date, the bill was dishonoured

noting charges amount to Rs. 300. Ricardo then draws a bill for

the balance plus interest of Rs. 1700. Before the due date of this

bill Ronaldo pays the amount at a discount of Rs. 400 to retire

the bill. Journal Entries Ronaldo. [Ans]

Problem No. 16

Sun draws a bill on Moon for Rs. 15,000 at 3 months. Moon

accepts the bill and return to Sun. Sun discounted the bill @ 10

% p.a. with the bank. On Maturity Moon finds herself unable to

make payment of the bill and requested Sun to renew the bill.

OMTEX CLASSES BILL OF EXCHANGE

Sun accepts the proposal on the condition that Moon should Pay

Rs. 12,000 in cash and accept a new bill at one month along

with interest at 10% p.a. These arrangements were carried

through. Moon retires the bill by paying Rs. 3015/- Pass Journal

Entries in the books of Sun. [Ans]

Problem No. 17.

Nazriya draws a bill on Anitha for Rs. 60,000 at 4 months.

Anitha accepts the bill and returns it to Nazriya who discounts

the bill with the bank at a discount of 10% p.a. Before the due

date of Bill Anitha requested Nazriya to accept Rs. 40000 in

cash and draw a bill for the balance plus interest at 12% p.a. for

two months. Nazriya draws a bill as the request is agreed. The

bill is sent to bank for collection. On the due date the bill was

honoured. Pass the necessary journal entries in the books of

Anitha. [Ans.]

Problem No. 18.

8. Anil drew a bill for Rs. 4,000 on Navin on 1st May, 2013 for

three months. This was for the amount which Navin owed to

Anil. Navin accepts the same and return it to Anil who

discounted at his bank for Rs. 3,900. On 1st Aug, 2013 Navin

requested Anil to renew the bill and Anil agreed on the

condition that Rs. 1,000 is paid immediately and Navin should

accept the new bill for 3 months for the balance payable plus

interest of Rs. 45. These arrangements were carried through.

However, on 1st October, 2013, Navin retired his acceptance for

Rs. 3, 035. Pass journal entries in the books of Anil. [Ans]

OMTEX CLASSES BILL OF EXCHANGE

Problem No. 19.

9. Karthik accepted a bill for Rs. 20,000/- drawn by Jones at

three months. Jones got the bill discounted with his bank for Rs.

19,900. Before the due date Karthik approached Jones for

renewal of the bill. Jones agreed on the condition that Rs.

10,000/- be paid immediately together with interest on the

remaining amount at 6% p.a. For balance Karthik should accept

a new bill for three months. These arrangements were carried

through but afterwards, Karthik become Insolvent and only 80

% of the amount could be recovered from his estate. Give

journal entries in the books of Karthik. [Ans]

Problem No. 20.

10. Ajith accepted a bill for Rs. 10,000 drawn by Surya at three

months. Surya got the bill discounted with his bank for Rs.

9,700. Before the due date, Ajith approached Surya for renewal

of the Bill. Surya agreed on the condition that Rs. 7,000 is paid

immediately together with an interest on remaining amount at

18% p.a. for four months and for the balance Ajith should accept

a new bill. But afterwards Ajith become insolvent and only 25%

of the amount could be recovered from her estate. Pass journal

entries in the books of Surya. [Ans]

Problem No. 21.

Salman draws a bill on Amithab worth Rs. 90,000 for three

months which was accepted by Amithab. On the same date

Salman discounted the bill with his bank @ 10 % p.a. On the

OMTEX CLASSES BILL OF EXCHANGE

due date Amithab dishonoured his acceptance. Amithab paid Rs.

40,000/- to Salman and accepted a fresh bill for two months for

the balance including interest of Rs. 4000. Amithab became

insolvent before the maturity of the bill and 50 paise in a rupee

was received at first and final dividend from his estate. Journal

entries books of Amithab. [ANS]

Problem No. 22.

On 1st January, 2014 Archana drew a bill for Rs. 6,000 for 2

months periods on Ramya. Ramya duly accepted the bill. On

4th January 2014 Archana discounted the bill with her bank for

Rs. 5850. However, on the due date the bill was dishonoured.

Ramya agreed to accept a new bill with an interest of Rs. 150 for

a period of one month. The bill was duly met on the due date.

Give the journal entries in the books of Archana and show

Archana’s account in the books of Ramya. [ANS]

Problem No. 23.

Mukesh owes Anil Rs. 40000 for which Anil draws a bill for 2

months on 1st February, 2014. Mukesh accepts it and returns it

to Anil. On 4th March, 2014, Mukesh approaches Anil and

request him to accept Rs. 10000 in cash and draw a fresh bill for

3 months for the balance plus interest @ 10% p.a. Anil accepts

the request and draw a bill accordingly which is accepted by

Mukesh. On 1st June 2014 Mukesh retired his acceptance under

discount of Rs. 30/-. Pass journal entries in the books of Anil

and prepare Anil account in the ledger of Mukesh. [ANS]

OMTEX CLASSES BILL OF EXCHANGE

Format of the Bill of Exchange

Format No. 1

Drawer : Ramesh Mishra, L.B.S. Road, Ghatkopar, Mumbai

Drawee : Nandkumar Sharma, Laxmi Road, Pune

Payee: Rupesh Kumar Pande, Rajkamal Chowk, Amaravati.

Period of bill: 90 days

Amount of bill : Rs. 25,000

Date of Bill: 17th February, 2014

Date of Acceptance: 20th February, 2014

Accepted for : Rs. 20,000 only.

Format No. 2

Drawer : Shekhar Desai, Shastri Road, Mahad.

Drawee : Sharad Verma, Narayanpeth, Pune

OMTEX CLASSES BILL OF EXCHANGE

Payee : Mukund Pande, Panel.

Amount : Rs. 3,500/-

Period : 3months.

Date of Bill : 21st June, 2013

Bill accepted : For 3,000 on 25th June, 2013.

Format No. 3

Drawer : Abhijit Patil, Vikram nagar, Patna.

Drawee : Tejas Kapare, Kothrud, Pune.

Payee : Amey Patki, Nagpur.

Amount : Rs. 7500

Period : 60 days

Term : After sight

Date of Bill Drawn : 1st June 2013

Date of Acceptance : 11th June 2013

OMTEX CLASSES BILL OF EXCHANGE

Accepted bill for Rs. : 7000 only.

Format No. 4

Drawer: Yamini Gupta, Sarvapriya Vihar, Delhi

Drawee – Kamini Sharma, Raj baug, Agra.

Period – 100 days.

Term – After acceptance

Date of Bill – 1st January, 2014

Amount – Rs. 10,500/-

Date of Acceptance – 3rd January, 2014

Format No. 5

Drawer : Mr. Avadhoot Raktade, 586. Main Road, Ajara

Drawee : Mr. Mukund Aglawe 133, Chandni Chowk, Panvel.

Amount : Rs. 8,800.

Period : Two Months.

OMTEX CLASSES BILL OF EXCHANGE

Date of Bill : 1 st May, 2013.

Date of Acceptance : 5 th May, 2013.

Format No. 6

Drawer : Soundariya, Neelam Bhawan, Kalyan

Drawee : Sugandi, Dastur Nagar, Amaravati

Payee : Umesh , Deogad

Period : 90 days

Amount : Rs. 7,555

Date of bill : 15th March 2012

Accepted on : 20th March 2012

Format No. 7

On 10th March, 2013 Rajesh Bhoyar, Gandhinagar, Nagpur

draws a 2 months bill for Rs. 3,000 on Samir Choudhary, Main

OMTEX CLASSES BILL OF EXCHANGE

Road, and Belapur. Samir Choudhary accepted the bill on

15th March 2013

Format No. 8

Drawer : Vilas Patil, 44, M.G. Road, Nanded.

Drawee : Pankaj Pawar, 70, Bhavani Galli, Solapur.

Payee : Ramchandra Rampure, Rampur.

Period : 60 days.

Date of Bill : 28th January, 2014

Date of Acceptance : 29th January, 2014

Amount of the Bill : Rs. 2,800/-

Format No. 9

Drawer : Vijay Bhat, Main Road, Nagpur.

Drawee : Ashok Kulkarni, M.G. Road, Nagpur.

Payee : Anil Jadhav, Pune.

OMTEX CLASSES BILL OF EXCHANGE

Amount : Rs. 6,950.

Period : 80 days.

Date of Bill : 7th March, 2013.

Accepted on : 10th March, 2013. For 90 days.

Definition of Bills of Exchange

Fill ups . Select the most appropriate alternative form those

given below.

Write the words/ term /phrase which can substitute each of the

following statements

True or False

Journal Entries in the books of Drawer

Journal Entries in the Books of Drawee

A BILL OF EXCHANGE

Parties to Bill of Exchange

Common Rules regarding Bills of Exchange (Sections 132 and

133)

Acceptance