Bills of Exchange Ncert Solutions Class 11

Contents

• 1 NCERT Solutions For Class 11 Financial Accounting – Bills of Exchange
  • 1.1 Short Answer Type Questions
  • 1.2 Long Answer Type Questions
  • 1.3 Numerical Questions

NCERT Solutions For Class 11 Financial Accounting – Bills of Exchange

Short Answer Type Questions

Q1. Name any two types of commonly used negotiable instruments.
Solution:
Cheques and Bills of exchange are the commonly used negotiable instruments.

Q2. Write two points of distinction between bills of exchange and promissory note.
Solution:

Q3. State any four essential features of bill of exchange.
Solution:
Essential features of bills of exchange are as follows:

1. A bill of exchange is a written order to make payment.
2. It is an unconditional order to make payment by a person i.e. drawee.
3. The amount of bill of exchange and the date of payment are certain.
4. It is signed by the drawer of the bill.
5. It is accepted by the drawee by signing on it.
6. The amount specified in the bill of exchange is payable either on demand or on the expiry of a fixed period.
7. The amount specified in the bill is payable either to a certain person or to his order or to the bearer of the bill.
8. It is stamped as per legal requirements.

Q4. State the three parties involved in a bill of exchange.
Solution:
There are three parties in a bill of exchange:

1. Drawer is the person who makes the bill of exchange. She/he is a person who has granted credit to the person on whom the bill of exchange is drawn. The drawer is entitled to receive money from the drawee (acceptor).
2. Drawee is the person on whom the bill of exchange is drawn for acceptance and to whom credit has been granted by the drawer. He/she is liable to pay money to the creditor/drawer.
3. Payee is the person who receives the payment from the drawee. Usually the drawer and the payee are the same person.

Q5. What is meant by maturity of a bill of exchange?
Solution:
The date calculated after adding 3 days of grace to the due date of a bill is called the date of maturity of a bill. It is to be noted that when a bill is to be payable on demand/at sight, then days of grace is not applicable. When the period of a bill is mentioned in days, the maturity of bill is calculated in days. Similarly, when the period of a bill is mentioned in months, the maturity of bill is calculated in months. In certain cases, when the maturity date of any bill falls on a public holiday, then the maturity date of the bill will be the previous business day.

Q6. What is meant by dishonour of a bill of exchange?
Solution:
When the drawee of the bill fails to make the payment on the maturity date of the bill, then the bill is said to have been dishonoured. Hence, liability of the acceptor is restored. Entries made for recording dishonour of the bill of exchange are as follows:
In the books of drawer

Q7. Name the parties to a promissory note
Solution:
There are two parties to a promissory note:

1. Maker- The person who makes the note and undertakes to pay the amount.
2. Payee- The person who receives the payment.

Q8. What is meant by acceptance of a bill of exchange?
Solution:
A bill of exchange is a written instrument which contains an unconditional order directing a person to pay a certain amount on an agreed date. In other words, it is drawn by the creditor on her/his debtors to make a payment of a certain amount on the mentioned date. Such a bill comes into existence after the consent of both the parties. A bill cannot come into existence without the acceptance of a debtor. Hence, the debtor of the bill has to accept the terms of the bill, sign the same and make it a legal document.

Q9. What is noting of a bill of exchange?
Solution:
When the drawee of the bill fails to make the payment on the maturity date of the bill, then the bill is said to have been dishonoured. To have a legal proof of the dishonour, the bill gets noted by the notary public who is approved by the central/state government. The notary public charges fees called the noting charges for noting and protesting the bill of exchange of its dishonour.

Q10. What is meant by renewal of a bill of exchange?
Solution:
When the drawee does not have enough funds to make the payment, he may approach the drawer and ask for an extension of time for the payment. If the drawer agrees, then a new bill is drawn which is known as renewal of bill. The new bill may include interest for the extended period.

Q11. Give the performa of a Bills Receivable Book.
Solution:

Q12. Give the performa of a Bills Payable Book.
Solution:

Q13. What is retirement of a bill of exchange?
Solution:
When the drawee of the bill pays off the amount of the bill before the maturity of the bill it is called retirement of the bill. Holder of the bill may give discount for such earlier payment which is called as 'rebate'.
Entry in the books of the holder of the bill

Q14. Give the meaning of rebate.
Solution:
If the drawee wishes to pay the bill before the due date of the bill to the holder and the holder accepts such request, then due to the early payment, the holder may give some discount to the drawee. Such a discount is termed as rebate.

Q15. Give the performa of a Bill of Exchange.
Solution:
Performa of a Bill of exchange is given below.

Long Answer Type Questions

Q1. A bill of exchange must contain "an unconditional promise to pay". Do you agree with a statement?
Solution:
According to Negotiable Instrument Act, 1981, "A bill of exchange is defined as 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."
As the definition mentions the bill is an unconditional order to pay i.e. no conditions should be applicable with respect to the payment and the drawee of the bill is obliged to pay the maker of the bill. This is one of the main features of a bill of exchange. All the conditions with respect to the bill, for example; the amount, the date of payment, the parties involved needs to be specified with clarity.

Q2. Briefly explain the effects of dishonour and noting of a bill of exchange.
Solution:
On the maturity of the bill, when the acceptor of the bill fails to make the payment, it is said that the bill is dishonoured. This restores the liability of the acceptor.
Entry in the books of drawer:

Noting charges is the fee paid to the notary public for noting and protesting the bill of exchange of its dishonour.
Effect of Noting charges in the books of the drawer:

Q3. Explain briefly the procedure of calculating the date of maturity of a bill of exchange? Give example.
Solution:
The procedure to calculate the date of maturity of a bill of exchange is given below.

1. Determine the date on which the bill will be due.
2. Add three days of grace to the due date of the bill. It is standard process to add days of grace.
3. The date obtained after adding the three days to the due date is called the maturity date of the bill.

However, the application of the days of grace depend on the following situations:

1. Days of grace are not applicable when a bill is payable 'at sight' or on demand.
2. When the period of the bill is mentioned in months, the calculation of the maturity date will be in the terms of calendar month.
3. When the period of the bill is mentioned in days, the calculation of the maturity date is also calculated in days including the date of payment but excluding the date of transaction.
4. If the bill matures on a national holiday or Sunday, then the preceding business day becomes the maturity date of the bill.
5. For example, if the maturity date of a bill is calculated as on 15th August, 2015 then the preceding day that is 14th August, 2015 will be considered as the maturity date.
6. If the maturity day happens to be an emergency holiday declared under the Negotiable
7. Instruments Act, 1881, then the next working day is to be considered as the maturity date.

Q4. Distinguish between bill of exchange and promissory note.
Solution:

Q5. Briefly explain the purpose and benefits of retiring a bill of exchange to the debtor and the creditor.
Solution:
When the drawee of the bill pays off the amount of the bill before the maturity of the bill it is called retirement of the bill. Holder of the bill may give discount for such earlier payment which is called as 'rebate'.
As the holder of the bill provides the rebate, it is a loss for the holder of the bill and hence it is debited in the books of the holder when payment is received.

Q6. Explain briefly the purpose and advantages of maintaining of a Bills receivable book.
Solution:
Bills receivable book is a special purpose book that is maintained to keep records of bills received from the debtors. It contains details such as acceptor's name, date of bill, due date and amount. for future references.
Benefits of maintaining the bill receivable book:

1. Source of information: The general information related to the each of the bills i.e. the amount, due date and name of the drawee are recorded at one place and hence are easily accessible.
2. Avoid fraud: As the details of all the bills are recorded at one place, possibility of fraud is reduced.
3. Responsibility: The person who maintains the bills receivable book will also be responsible for any errors or omissions. Therefore, higher degree of accountability and responsibility exists. Also, if any error is detected, then it can be fixed quickly.
4. Time saving: Recording of bills receivable through the bills receivable book takes lesser time than that of journal entry.

Q7. Briefly explain the benefits of maintaining a bills payable book and state how is its posting is done in the ledger.
Solution:
A bills payable book is a special purpose book, maintained to keep records of acceptance of bills, given to the creditors. It contains details of the amount, date of bill, due date and name of the drawer to whom acceptance is given for future references.
Benefits of Maintaining Bills Payable Book:

1. Source of information: The general information related to the each of the bills i.e. the amount, due date and name of the drawee are recorded at one place and hence are easily accessible.
2. Avoid fraud: As the details of all the bills are recorded at one place, possibility of fraud is reduced.
3. Time saving: Recording of bills receivable through the bills receivable book takes lesser time than that of journal entry.
4. Responsibility: As the transactions are recorded by the same person errors if any can be easily detected and rectified. This leads to enhancement of responsibility and accountability of the accountant.

Numerical Questions

Q1. On Jan 01, 2015 Rao sold goods ₹ 10,000 to Reddy. Half of the payment was made immediately and for the remaining half Rao drew a bill of exchange upon Reddy payable after 30 days. Reddy accepted the bill and returned it to Rao. On the due date Rao presented the bill to Reddy and received the payment. Journalise the above transactions in the books Rao and prepare of Rao's account in the books of Reddy.
Solution:

Q2. On Jan 01, 2015, Shankar purchased goods from Parvati for ₹ 8,000 and immediately drew a promissory note in favour of Parvati payable after 3 months. On the date of maturity of the promissory note, the Government of India declared holiday under the Negotiable Instrument Act 1881. Since, Parvati was unaware about the provision of the law regarding the date of maturity of the bill, she handed over the bill to her lawyer, who duly presented the bill and received the payment. The amount of the bill was handed over by the lawyer to Parvati immediately. Record the necessary Journal entries in the books of Parvati and Shankar.
Solution:

Q3. Vishal sold goods for ₹ 7,000 to Manju on Jan 05, 2015 and drew upon her a bill of exchange payable after 2 months. Manju accepted Vishal's draft and handed over the same to Vishal after acceptance. Vishal immediately discounted the bill with his bank @12% p.a. On the due date Manju met her acceptance. Journalise the above transactions in the books of Vishal and Manju.
Solution:

Q4. On Feb 01, 2015, John purchased goods for ₹ 15,000 from Jimmi. He immediately made a payment of ₹ 5,000 by cheque and for the balance accepted the bill of exchange drawn upon him by Jimmi. The bill of exchange was payable after 40 days. Five days before the maturity of the bill, Jimmi sent the same to his bank for collection. The bank duly presented the bill to John on the due date who met the bill. The bank informed the same to Jimmi. Prepare John's account in the books of Jimmi and Jimmi's account in the books of John.
Solution:

Q5. On Jan 15, 2015, Kartar Sold goods for ₹ 30,000 to Bhagwan and drew upon him three bills of exchanges of ₹ 10,000 each payable after one month, two month, and three months respectively. The first bill was retained by Kartar till its maturity. The second bill was endorsed by him in favour of his Cr. or Ratna and the third bill was discountedby him immediately @ 6% p.a. All the bills were met by Bhagwan. Journalise the above transactions in the books of Kartar and Bhagwan. Also prepare ledger accounts in books of Kartar and Bhagwan.
Solution:

Q6. On Jan. 01, 2015 Arun sold goods for ₹ 30,000 to Sunil. 50% of the payment was made immediately by Sunil on which Arun allowed a cash discount of 2%. For the balance Sunil drew a promissory note in favour of Arun payable after 20 days. Since, the date of maturity of bill was a public holiday; Arun presented the bill on a day, as per the provisions of Negotiable Instrument Act which was met by Sunil. State the date on which the bill was presented by Arun for payment and jounalise the above transactions in the books of Arun and Sunil.
Solution:
As per the provisions of Negotiable Instrument Act, when the maturity date of any bill falls on a public holiday then the maturity date of the bill will be the previous business day.
20 days after Jan 01, 2015 is 21st Jan, 2015. Adding 3 days of grace, we get the maturity date as 24th Jan, 2015. Previous business day is 23rd Jan, 2015.

Q7. Darshan sold goods for ₹ 40,000 to Varun on 8.1.2015 and drew upon him a bill of exchange payable after two months. Varun accepted the bill and returned the same to Darshan. On the due date the bill was met by Varun. Record the necessary Journal entries in the books of Darshan and Varun in the following circumstances.

1. When the bill was retained by Darshan till the date of its maturity.
2. When Darshan immediately discounted the bill @ 6% p.a. with his bank.
3. When the bill was endorsed immediately by Darshan in favour of his Cr. or Suresh.
4. When three days before its maturity, the bill was sent by Darshan to his bank for collection.

Solution:
Case i: When the bill was retained by Darshan till the date of its maturity


Case ii: When Darshan immediately discounted the bill @ 6% p.a. with his bank.


Case iii: When the bill was endorsed immediately by Darshan in favour of his Cr. or Suresh.


Case iv: When three days before its maturity, the bill was sent by Darshan to his bank for collection.

Q8. Bansal Traders allow a trade discount of 10% on the list price of the goods purchased from them. Mohan traders, who runs a retail shop made the following purchases from Bansal Traders

Date	Amount ₹
Dec.21, 2015	1,000
Dec.26, 2015	1,200
Dec.28, 2015	2,000
Dec.31, 2015	5,000

For all the purchases Mohan Traders drew promissory note in favour of Bansal Traders payable after 30 days. The promissory note for the sale of Dec. 21, 2015 was retained by Bansal Traders with them till the date of its maturity. The promissory note drawn on 26.12.2015 was discounted by Bansal Traders from their bank at 12% p.a. The promissory note drawn on Dec. 28, 2015 was endorsed by Bansal Traders in favour of their Cr. or Dream Soaps in full settlement of a purchase amounting to ₹ 1,900. On 25.1.2015 Bansal Traders sent the promissory note drawn on Dec. 31, 2015 to their bank for collection. All the promissory notes were met by Mohan Trade₹ Record the necessary journal entries for the above transactions in the books of Bansal Traders and Mohan Traders and prepare Mohan Traders account in the books of Bansal Traders and Bansal Traders account in the books of Mohan Trade₹
Solution:

Q9. Vimal purchased goods ₹ 25,000 from Kamal on Jan 15, 2015 and accepted a bill of exchange drawn upon him by Kamal payable after two months. On the date of the maturity the bill was duly presented for payment. Vimal dishonoured the bill.
Record the necessary journal entries in the books of Kamal and Vimal when:
i. The bill was retained by Kamal till the date of its maturity.
ii. The bill was immediately discounted by Kamal with his bank @ 6% p.a.
iii. The bill was endorsed by Kamal in favour of his Cr.orSharad.
iv. Five days before its maturity the bill was sent by Kamal to his bank for collection.
Solution:
Case i : The bill was retained by Kamal till the date of its maturity


Case ii: When the bill was discounted by Ravinderan immediately with his bank @ 6% p.a.


Case iii: When the bill was endorsed to his Cr. or Ganeshan.


Case iv: When the bill was sent by Ravinderan to his bank for collection a few days before it maturity.

Q10. Ravi sold goods for ₹ 40,000 to Sudershan on Feb 13, 2015. He drew four bills of exchange upon Sudershan. The first bill was for ₹ 5,000 payable after one month. The second bill was for ₹ 10,000 payable after 40 days; the third bill was for ₹ 12,000 payable after three months and fourth bill was for the balance amount payable after 19 days. Sudershan accepted all the bills and returned the same to Ravi. Ravi discounted the first bill with his bank at 6% p.a. He endorsed the second bill to his Cr. or Mustaq for the full settlement of a debt of ₹ 10,200. The third bill was kept by Ravi with him till the date of maturity. Five days before the maturity of the fourth bill, Ravi sent the bill to his bank for collection. All the four bills were dishonoured by Sudarshan on maturity. Sudershan settled Ravi's claim in cash three days after the dishonour of each bill along with interest @12% p.a. for the terms of the bills.
You are requested to record the necessary journal entries in the books to Ravi, Sudershan, Mustaq and bank for the above transaction. Also prepare Sudershan's account and Mustaq's account in the books of Ravi.
Solution:

Q11. On Jan 01, 2015 Neha sold goods for ₹ 20,000 to Muskan and drew upon her a bill of exchange payable after two months. One month before the maturity of the bill Muskan approached Neha to accept the payment against the bill at a rebate @ 12% p.a. Neha agreed to the request of Muskan and Muskan retired the bill under the agreed rate of rebate. Journalise the above transaction in the books of Neha and Muskan.
Solution:

Q12. On Jan 15, 2015 Raghu sold goods worth ₹ 35,000 to Devendra and drew up to the latter three bills of exchanges. The first bill was for ₹ 5,000 payable after one month, the second bill was for ₹ 20,000 payable after three months and third bill for balance amount for 4 months. Raghu endorsed the first bill in favour of his Cr. or Dewan in full settlement of a debt of ₹ 5,200. The second bill was discounted by Raghu @ 6% p.a. and the third bill was retained by Raghu till the date of maturity. Devendra dishonoured the bill on maturity and the bank paid ₹ 30 as noting charges. Four days before the maturity of the third bill Raghu, sent the same for collection to his bank. The third bill was also dishonoured by Devendra and the bank paid ₹ 200 as noting charges. Five days after the dishonour of the bill Devendra paid the entire amount due to Raghu along with interest ₹ 1,000 for this purpose Devendra obtained a short term loan from his bank. You are requested to record the necessary journal entries in the books of Raghu Devendra and Dewan and also prepare Devendra's account in Raghu's books and Raghu's account in Devendra's account.
Solution:

Q13. Vimal purchased goods ₹ 25,000 from Kamal on Jan 15, 2015 and accepted a bill of exchange drawn upon him by Kamal payable after two months. On the date of the maturity the bill was duly presented for payment. Vimal dishonoured the bill.
Record the necessary journal entries in the books of Kamal and Vimal when:
i. The bill was retained by Kamal till the date of its maturity.
ii. The bill was immediately discounted by Kamal with his bank @ 6% p.a.
iii. The bill was endorsed by Kamal in favour of his Cr.orSharad.
iv. Five days before its maturity the bill was sent by Kamal to his bank for collection.
Solution:
Case i : The bill was retained by Kamal till the date of its maturity


Case ii: The bill was immediately discounted by Kamal with his bank @ 6% p.a.


Case iii: The bill was endorsed by Kamal in favour of his Cr. or Sharad.


Case iv: Five days before its maturity the bill was sent by Kamal to his bank for collection.

Q14. Abdula sold goods to Tahir on Jan 17, 2015 for ₹ 18,000. He drew a bill of exchange for the same amount on Tahir for 45 days. On the same date Tahir accepted the bill and returned it to Abdulla. On the due date Abdulla presented the bill to Tahir which was dishonoured. Abdulla paid ₹ 40 as noting charges. Five days after the dishonour of his acceptance Tahir settled his debt by making a payment of ₹ 18,700 including interest and noting charges.
Record the necessary journal entries in the books of Abdulla and Tahir. Also prepare Tahir's account in the books of Abdulla and Abdulla's account in the books of Tahir.
Solution:

Q15. Asha sold goods worth ₹ 19,000 to Nisha on March 02, 2015. ₹ 4,000 were paid by Nisha immediately and for the balance she accepted a bill of exchange drawn upon her by Asha payable after three months. Asha discounted the bill immediately with her bank. On the due date Nisha dishonoured the bill and the bank paid ₹ 30 as noting charges.
Record the necessary journal entries in the books of Asha and Nisha.
Note: In this question rate of discount is not given, the rate of discount (6% p.a.) has been assumed.
Solution:

Q16. On Feb. 02, 2015, Verma purchased from Sharma goods for ₹ 17,500. ₹ 2,500 immediately and for the balance gave a promissory note to Sharma payable after 60 days. Sharma immediately endorsed the promissory note in favour of his Cr. or Gupta for the full settlement of a debt of ₹ 15,400. On the due date of the bill Gupta presented the bill to Verma which the latter dishonoured and Gupta paid ₹ 5,000 noting charges. On the same date Gupta informed Sharma about the dishonour of the bill. Sharma settled his debt to Gupta by cheque for ₹ 15,500 which includes noting charges and interest. Verma settled Sharma's claim by cheque for the same amount.
Record the necessary journal entries is the books of Sharma, Gupta and Verma for the above transaction and prepare Verma's and Gupta's accounts in the books of Sharma. Sharma's account in the books of Verma. And also Sharma's account in the books of Gupta.
Note: In this question ₹ 5,000 is given as noting charges, there is mistake. Here ₹ 50 has been taken as noting charges instead of ₹ 5,000.
Solution:

Q17. Lilly sold goods to Mathew on 1.3.2015 for ₹ 12,000 and drew upon Mathew a bill of exchange for the same amount payable after two months. Lilly immediately discounted the bill with her bank at 9% p.a. The maturity date of the bill was a non business day (holiday), therefore, Lilly had to present the bill as per the provisions of the Indian Instruments Act, 1881. The bill was dishonoured by Mathew and Lilly paid `45 as noting charges. Mathew settled the claim of Lilly five days after the dishonour of the bill by a cheque, which includes interest @ 12% for the term of the bill.
Journalise the above transactions in the books of Lilly and Mathew and prepare Mathew's account in the books of Lilly and Lilly's account in the books of Mathew.
Solution:

Note: In this question, May 04 has been considered as holiday, so the date of maturity will be May 03, 2006 in place of May 04, 2006.



Note: In this question, there is a contradiction. As per the discounting rule-Bank is regarded as the holder of the bill. It is the bank who presents the bill for payment and also pays the noting charges on behalf of the drawer (Lilly). However, as per the question. Lilly, who is presenting, discounting the bill and also paying the noting charges. Thus, in the solution, we have assumed that it is bank and not Lilly who presents, discounts and pays the noting charges in case of dishonour of bill.

Q18. Kapil purchased goods for ₹ 21,000 from Gaurav on 1.2.2015 and accepted a bill of exchange drawn by Gaurav for the same amount. The bill was payable after one month. On 25.2.2015 Gaurav sent the bill to his bank for collection. The bill was duly presented by the bank. Kapil dishonoured the bill and the bank paid ₹ 100 as noting charges. Record the necessary journal entries for the above transactions in the books of Kapil and Gaurav.
Solution:

Q19. On Feb. 14, 2015 Rashmi sold good ₹ 7,500 to Alka. Alka paid ₹ 500 in cash and for the bank balance accepted a bill of exchange drawn upon her by Rashmi payable after two months. On Apr.10, 2015 Alka approached Rashmi to cancel the bill since she was short of funds. She further requested Rashmi to accept ₹ 2,000 in cash and draw a new bill for the balance including interest ₹ 500. Rashmi accepted Alka's request and drew a new bill for the amount due payable after 2 months. The bill was accepted by Alka. The new bill was duly met by Alka on maturity.
Record the necessary journal entries in the books of Rashmi and Alka and prepared Alka's account in the books of Rashmi's and Rashmi's account in the books of Alka's.
Solution:

Q20. Nikhil sold goods for ₹ 23,000 to Akhil on Dec. 01, 2015. He drew upon Akhil a bill of exchange for the same amount payable after 2 months. Akhil accepted the bill and sent it back to Nikhil. Nikhil discounted the bill immediately with his bank @12% p.a. On the due date Akhil dishonoured the bill of exchange and the bank paid ₹ 100 as noting charges. Akhil requested Nikhil to draw a new bill upon him with interest @10% p.a. which he agreed. The new bill was payable after two months. A week before the maturity of the second bill Akhil requested Nikhil to cancel the second bill. He further requested to accept ₹ 10,000 in cash immediately and drew a third bill upon him including interest of ₹ 500. Nikhil agreed to Akhil's request. The third bill was payable after one month. Akhil met the third bill on its maturity.
Record the necessary journal entries in the books of Nikhil and Akhil and also prepare Akhil's account in the books of Nikhil and Nikhil's account in the books of Akhil.
Solution:

Q21. On Jan 01, 2015 Vibha sold goods worth ₹ 18,000 to Sudha and drew upon the latter a bill of exchange for the same amount payable after two months. Sudha accepted Vibha's draft and returned the same to Vibha after acceptance. Vibha endorsed the bill immediately in favour of her Cr. or Geeta. Five days before the maturity of the bill Sudha requested Vibha to cancel the bill since she was short of funds. She further requested to draw a new bill upon her including interest of ₹ 200. Vibha accepted Sudha's request. Vibha took the bill from Geeta by making the payment to her in cash and cancelled the same. Then she drew a new bill upon Sudha as agreed. The new bill was payable after one month. The new bill was duly met by Sudha on maturity. Record the necessary journal entries in the books of Vibha.
Solution:

Q22. Following was the position of debtor and Creditor of Gautam as on 1.1.2015.

	Debtors  ₹	Creditors  ₹
Babu	5,000	–
Chanderkala	8,000	–
Kiran	13,500	–
Anita	14,000	–
Anju	–	5,000
Sheiba	–	12,000
Manju	–	6,000

The following transactions took place in the month of Jan 2015:

Jan 02	Drew on Babu at two months after date at full settlement for Rs.4,800. Babu accepted the bill and returned it on 5.1.2015.
Jan 04	Babu's bill discounted for Rs.4,750.
Jan 08	Chanderkala sent a promissory note for Rs.8,000 payable three months after date.
Jan 10	Promissory note received from Chanderkala discounted for Rs.7,900.
Jan 12	Accepted Sheiba draft for the amount due payable two months after date.
Jan 22	Anita sent his promissory note payable after two months.
Jan 23	Anita's promissory note endorsed in favour of Manju.
Jan 25	Accepted Anju's draft payable after three months.
Jan 29	Kiran sent Rs.2,000 in cash and a promissory note for the balance payable after three months.

Record the above transactions in the proper subsidiary books.
Solution:



There is difference between Bills of Exchange and Promissory Note. In case of Promissory Note, parties are makers and payees. However, in Bills of Exchange parties are Drawer, drawee (acceptor) and payee on account difference Promissory Note has not been recorded in Bills Receivable and Bills Payable book.

Q23. On Jan. 01, 2015 Harsh accepted a month bill for ₹ 10,000 drawn on him by Tanu for latter's benefit. Tanu discounted the bill on same day @ 8% p.a. On the due date Tanu sent a cheque to Harsh for honour the bill. Harsh duly honoured his acceptance.
Record the journal entries in the Books of Tanu and Harsh.
Solution:

Q24. Ritesh and Naina were in need of funds temporarily. On August 01, 2015 Ritesh drew upon Naina a bill for ₹ 12,000 for 4 months. Naina accepted the bill and returned to Ritesh. Ritesh discounted the Bill @ 8% p.a. Half amount of the discounted bill remitted to Naina. On due date, Ritesh sent the required sum to Naina, who met the bill. Journalise the transaction in the books of both the parties.
Solution:

Q25. On Jan. 01, 2014, Bhanu and Naman drew on each other a bill for ₹ 8,000 payable 3 months after the due date for their mutual benefit. On January 02 they discounted with their bank each other's bill at 5% p.a. on the due date each met his own acceptance. Give journal entry in the books of Bhanu and Naman.
Solution:

Q26. On Nov. 01, 2014 Sonia drew a bill on Sunny for ₹ 15,000 for 3 months for mutual accommodation. Sunny accepts the bill and return it to Sonia. Sonia discounted the same with his bankers @ 6% p.a. The proceeds are shared between Sonia and Sunny in proportion of 2/3rd, 1/3rd respectively. On the due date Sonia remits his proportion to Sunny who fails to meet the bill and as a result Sonia has to meet it. Sunny give a fresh acceptance for the amount due to Sonia plus interest of ₹ 100. Sunny meet his second acceptance on due date.
Record the necessary journal entries in the books of Sonia and Sunny.
Solution:


Note: In the question, the maturity date of the second bill is not mentioned; so the date of honouring the bill has not been shown.

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Bills of Exchange Ncert Solutions Class 11

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